Iran to boost oil output by 500000 barrels

In the wake of Iran’s economic sanctions being lifted, oil prices in the world market have sunk to new lows.

Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), issued an order on Monday to increase production by 500,000 bpd, the country’s deputy oil minister said. Oil exports fell to an average of 1.4 million barrels a day in 2014 from 2.6 million barrels daily in 2011, the year before the U.S. and European Union intensified sanctions, the U.S. Energy Information Administration said in June.

Brent crude traded near a 12-year low in London, briefly dipping below $28 a barrel, after the lifting of worldwide sanctions on Iran paved the way for increased supply amid a global glut.

Production outside OPEC will drop by 660,000 barrels a day this year, the group said Monday in its monthly market report, deepening the decline from its previous estimate by 270,000 barrels a day.

“We were watching Asia when it opened, in terms of how markets digested (the news) over the weekend, and it did suggest to a fair degree that it (the lifting of sanctions) has been priced in”, said Miswin Mahesh, of Barclays Capital.

While some analysts see an initial increase of 500,000 bpd or more in Iranian exports as easy to achieve, further production increases are considered a challenging.

“Therefore, they have to strive toward improvement of [global] oil prices, which we hope this would happen and price would start to rise toward the end of the [current] Christian year”, he noted.

Weinberg said the prospect of additional oil from Iran will put the brakes on a recovery for oil in the foreseeable future.

“Investors shouldn’t look at Iran to make a quick buck but rather invest with a long-term view to benefit from the best- performing market of the next five years”, Ramin Rabii, the chief executive officer of Turquoise Partners, aTehran-based investment company, said on Saturday.

Javadi stated that at the peak of its production, Iran’s share from the global markets stands at four percent, saying, “This figure is not high in comparison with a country, which accounts for 10-15 percent of the market share”.

Iran is set to enter the market with at least a dozen very large crude carrier super-tankers that are already filled and in place for sale.

The news was met with horror in Gulf trading, with stock markets in Saudi Arabia, Qatar, Dubai, Abu Dhabi and Kuwait all battered.

Commerzbank, Germany’s number two lender, also said it was considering the possibility of returning to Iran. JBC Energy expects Iran to boost output more slowly, by 255 000 barrels a day in 2016, it said in an e-mailed note.