The US government's Energy Information Agency expects Iran to ramp up oil output at a fairly modest pace, adding its voice to those sceptical of Tehran's claims it can increase production rapidly in coming months.
There have been a wide range of forecasts from interested parties and independent analysts about how much Iran might be able to increase, which is one of the most important questions facing the oil market this year.
The widespread view is that the market will take many months for demand to catch up with supply and allow the price to recover some of the 75 per cent it has lost since late 2014.
As the International Energy Agency in Paris pointed out last week, Iran’s full return to the market is crucial: “Post-sanctions Iran is, in fact, likely to emerge as Opec’s only source of significant growth in 2016.”
Iran’s oil industry has been subject to international sanctions since 2011, which have curbed its ability to export oil and starved it of investment.
In an analysis of Iran’s prospects after nuclear-related sanctions, which were formally lifted last week, the EIA concludes that Iran’s production is likely to grow by 300,000 barrels per day this year and by another 500,000 bpd next year.
Bijan Namdar Zanganeh, Iran’s oil minister, has claimed that production would rise by 1 million bpd over six months.
But “the pace at which Iran will ramp up its exports now that sanctions are lifted is uncertain”, the EIA concedes. For example, it is not clear how much Iran has stored oil it could not sell.
“Iran has a considerable amount of oil stored offshore in tankers [between 30 million and 50 million barrels],” the agency notes. So any “meaningful production increases will occur [only] after some of the storage is cleared”.
After that, the rate of increase will depend on how much investment it can attract.
There are a number of factors that may stymie investment, including the fact that the oil price crash has put international oil companies under pressure from investors who want dividends protected even with much reduced cash flow.
The industry consultant Wood Mackenzie has argued that many big IOCs may be “willing to leave some value on the table” to secure a rare access to Iran’s huge reserves.
But the EIA says that political pressure may also still apply, even though the nuclear-related sanctions have been lifted.
Key to Iran’s impact on the market will be how exactly it goes about trying to recapture market share lost during the sanctions years, the EIA said.
Opec output is forecast to be flat this year, while non-Opec output is forecast to drop by 600,000 bpd.
So assuming its production increase is modest and it offers significant discounts, “Iran has the potential to regain a significant portion of market share lost since 2011 during the two-year forecast period”, the EIA concluded.
amcauley@thenational.ae
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Electric scooters: some rules to remember
- Riders must be 14-years-old or over
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- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
Naga
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
UAE currency: the story behind the money in your pockets
THE SPECS
Cadillac XT6 2020 Premium Luxury
Engine: 3.6L V-6
Transmission: nine-speed automatic
Power: 310hp
Torque: 367Nm
Price: Dh280,000
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
More from Rashmee Roshan Lall
UAE currency: the story behind the money in your pockets
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
If you go
The flights
Emirates and Etihad fly direct to Nairobi, with fares starting from Dh1,695. The resort can be reached from Nairobi via a 35-minute flight from Wilson Airport or Jomo Kenyatta International Airport, or by road, which takes at least three hours.
The rooms
Rooms at Fairmont Mount Kenya range from Dh1,870 per night for a deluxe room to Dh11,000 per night for the William Holden Cottage.
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
Fringe@Four Line-up
October 1 - Phil Nichol (stand-up comedy)
October 29 - Mandy Knight (stand-up comedy)
November 5 - Sinatra Raw (Fringe theatre)
November 8 - Imah Dumagay & Sundeep Fernandes (stand-up comedy)
November 13 - Gordon Southern (stand-up comedy)
November 22 - In Loyal Company (Fringe theatre)
November 29 - Peter Searles (comedy / theatre)
December 5 - Sinatra’s Christmas Under The Stars (music / dinner show)
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
Pari
Produced by: Clean Slate Films (Anushka Sharma, Karnesh Sharma) & KriArj Entertainment
Director: Prosit Roy
Starring: Anushka Sharma, Parambrata Chattopadhyay, Ritabhari Chakraborty, Rajat Kapoor, Mansi Multani
Three stars
ICC T20 Rankings
1. India - 270 ranking points
2. England - 265 points
3. Pakistan - 261 points
4. South Africa - 253 points
5. Australia - 251 points
6. New Zealand - 250 points
7. West Indies - 240 points
8. Bangladesh - 233 points
9. Sri Lanka - 230 points
10. Afghanistan - 226 points
The biog
Born November 11, 1948
Education: BA, English Language and Literature, Cairo University
Family: Four brothers, seven sisters, two daughters, 42 and 39, two sons, 43 and 35, and 15 grandchildren
Hobbies: Reading and traveling
