Iran is preparing to increase global oil sales amid signs of progress in talks to lift U.S. sanctions. However, even if a deal is reached, new oil will flow into the market only gradually.
The state-controlled National Iranian Oil Co. is preparing at the oil field and customer relationship levels to increase exports once a deal is reached, officials said. According to the most optimistic estimates, Iran’s oil production could return to pre-sanctions levels of nearly 4 million barrels per day as soon as three months, and the country may also use crude oil stored earlier.
But there are many obstacles to overcome. Any deal must fully lift a range of U.S. trade, shipping and insurance barriers to entities involved in Iran. Even so, buyers may be uninterested, said Mohammad Ali Khatibi, formerly of the National Iranian Oil Company.
“Our return to the market may be a gradual process rather than quick and sudden – it cannot happen overnight,” Khatib, Iran’s former OPEC envoy, said in an interview time indicates. That’s partly because the coronavirus pandemic has “severely damaged demand,” he said.
The pace of Iran’s return could be crucial for oil markets. Fuel consumption is picking up as vaccine programs advance and large economies reopen, but remain constrained by lockdowns and new outbreaks. Iran’s increased supply will put pressure on other OPEC+ countries, which have worked hard for more than a year to eliminate oversupply caused by the epidemic. </p
