Exports could hit 2.3 million barrels a day, deputy oil minister Moazami says
In this file photo from December 2014, an Iranian oil worker rides his bicycle at an oil refinery south of the capital Tehran. PHOTO:ASSOCIATED PRESS
TEHRAN—Iran wants to double its crude exports soon after sanctions are lifted and is pushing other members of the Organization of the Petroleum Exporting Countries to renew the cartel’s quota system, a top Iranian official said.
Both developments could set up a clash with Saudi Arabia, which is scrambling to raise its own export numbers and has opposed the return of production limits on individual OPEC members.
Iran’s efforts underscore how the country’s full return to the export market would upend the status quo among leading producers if Tehran clinches a deal with six world powers that would lift sanctions in exchange for curbs on its nuclear activities.
The latest deadline for a deal is Tuesday and officials said the elements of an agreement were falling into place over the weekend, though there were still important sticking points that could scuttle it.
Should sanctions be lifted, Iran’s deputy oil minister for planning and supervision,Mansour Moazami, said in an interview that his country’s oil exports would reach 2.3 million barrels, compared with around 1.2 million barrels a day today.
“We are like a pilot on the runway ready to take off. This is how the whole country is right now,” he said.
Iran is already in contact with former oil buyers in the European Union—traders such as Vitol Group and big oil producers such as Royal Dutch Shell PLC, Total SA and Eni SpA—as well as existing importers in Asia to help absorb the potential new shipments or invest in new fields if sanctions are lifted, according to the oil ministry and the companies.
Iran’s oil reserves are the fourth-largest in the world and its production capacity stands at about four million barrels a day—making it the second-biggest producer in OPEC if its output were unrestricted.
EU sanctions in 2012 banned the import of Iranian oil and prohibited most big oil companies from working with Iran, while American pressure forced Asian nations to reduce purchases.
The return of Iran’s oil would come at a sensitive time for the world’s oil markets.
The price of Brent crude, the global benchmark, has fallen by more than 45% in the past year, trading at around $61 a barrel, as supply outpaces demand by about two million barrels on any given day.
OPEC nations, especially Iraq and Saudi Arabia, have been pumping at record levels while production in the U.S.—a non-OPEC country—has shown signs of resilience.
Oil-market analysts have expressed skepticism that Iran could increase production as quickly as it says it will.
A senior OPEC delegate said some rival producers doubted Iran has the production and export facilities to reach its previous production levels of 4.2 million barrels a day.
Dr. Moazami said he didn’t expect prices to fall because global economic growth would drive demand higher. He said Iran’s own forecast for oil prices is now $70 a barrel by the end of 2015.
Dr. Moazami said Iran was pushing OPEC to return to individual production allocations or quotas. OPEC discontinued quotas in 2011 because they caused friction and member countries didn’t respect them anyway.
It replaced quotas with a collective ceiling—currently at 30 million barrels a day. But even that is seen as more of a guideline than a limit these days, OPEC officials have said, as the group is currently producing more than 31 million barrels a day.
Restoring quotes would need unanimous approval by the organization, something that is unlikely at this stage given the Saudi opposition.
“Their mechanism right now is not proper. It has to return to its past ability and capacity,” Dr. Moazami said of OPEC.
At its last meeting on June 5, Iran’s oil minister Bijan Zanganeh informed other OPEC ministers his country’s production would increase if sanctions are lifted and offered to reinstate the quotas.
But the proposal was brushed off by his Saudi counterpart, Ali al-Naimi, who said the output boost shouldn’t be discussed until it materializes and ruled out the return of production allocations, according to Gulf Arab and Iranian officials.
The senior OPEC official said the organization would return to quotas only if it “is absolutely necessary” and the recent price crash didn’t warrant such a decision.
