The government of Iran has announced it intends to increase its oil production to pre-sanction levels over the next couple of months, flooding the market with a new oil source just as Russia and Saudi Arabia have a deal in the works to stabilize the very volatile oil market.
This latest move threatens to exacerbate tensions already brewing between Iran and OPEC member Saudi Arabia.
Seyed Mohsen Ghamsari, the Director for International Affairs at The National Iranian Oil Company’s (NIOC), told reporters this week that Iran’s oil output has reached 3.8 million barrels, and the nation plans to increase that number in the recent future. Before Iran faced international sanctions, output hovered around four million barrels.
Speaking at a petroleum conference in Singapore held by S&P Global Platts, Seyed Mohsen Ghamsari said, “And as everyone knows in the market, we are soon going to introduce new crude oil to the market by the end of the year, (that means increasing output) by at least 300,000 barrels a day so it means that we can match (our pre-sanction) production in two or three months.” Since sanctions were lifted, Iran has been in a mad dash to get it oil production up and going as quickly as possible.
The head of European energy research at Citigroup, Seth Kleinman, told CNBC at the same conference in Singapore: “I’m going to join the rest of the market in remaining extremely skeptical that we’re going to see anything actually change, such as barrels taken off the market as a result of the Algiers meeting. This (Russia-Saudi) agreement is totally devoid of details.” He went on to describe the simultaneous increase in oil production as “not a coincidence.”
Ghamsari fails to mention that the increase comes at a time when major oil-producing countries such as Russia and Saudi Arabia are attempting to put together a deal to stabilize the oil market. Earlier this week, Russia and Saudi Arabia announced that they were working towards forming an energy alliance in an effort to stabilize the oil market that has been in freefall. Ghamsari pointed out to CNBC that it was up to Iran’s oil minister, Bijan Namdar Zangeneh, to halt the countries oil production: “He has to decide. But based on his previous announcements, as soon as we can come back to the previous production (levels) before sanctions, we can think about that and discuss. Now we are almost close to that production level.”
In late August, Breitbart News reported on Zangeneh efforts to try and quell the fears of other OPEC nations about Iran’s desire to increase it’s oil production. According to Breitbart, “he [Zangeneh] insisted there could be no talk of Iran abandoning its ambitions to restore its market share after last year’s nuclear agreement with world powers led to the lifting of sanctions on its oil exports.” Zangeneh also told SHANA news service: “Iran had no role in disrupting the stability of the oil market and after the (lifting of) sanctions we seek to revive our share in the global crude market.”
Zangeneh insisted that Iran will “cooperate with OPEC on improving prices and the state of the crude market.”