Iran has returned to the pre-sanctions level of oil production

Almaty. May 13. Silkroadnews – This April Iranian oil production has reached the pre-sanctions level, the monthly market survey by the World energy agency shows.

According to Deputy Minister of Oil and Director of the National Iranian Oil Company (NIOC) Rokneddin Javadi, now the average daily exports of oil by the Islamic Republic makes 2.1 million barrels a day. Cumulative production, as of May 5, has reached 3.7 million barrels a day.

The IEA estimates the oil production in April as 3.56 million barrels a day – a volume the country recorded in November 2011, two months prior to the oil embargo imposed by the European Union. Oil exports in the reporting month approached the pre-sanctions level, an increase of more than 40% or 600 thousand barrels up to 2 million barrels a day, the document states.

The largest buyer of the Iranian oil in April was China, in monthly terms the index grew by 57%, exceeding the level of 800 thousand barrels a day. Deliveries to Europe increased more than twofold to 500 thousand barrels a day. Prior to tightening of sanctions against the country in mid-2012, the European customers used to purchase Iranian oil in the amount of 600 thousand barrels a day.

The increase in exports was partly due to shipments that have not been made in time in March, the IEA said. There are no data available to trace what proportion of April deliveries was made from Iran’s largest export terminal at Khark island, which receives oil from the country’s fields, and what part was shipped to the tankers filled under embargo in force.

Iran can continue to increase production, yet the limitations relating to production capacity can hold back its potential for a significant increase, the agency warns. Prior to introduction of restrictive measures against Iran, the country used to be the second largest oil producer in OPEC, in August 2012 it gave way to Iraq.

Oil production in April was also increased by other OPEC members – Iraq and the United Arab Emirates, though Iran’s contribution to the total growth was the most significant (up to 300 thousand barrels a day higher compared to March). With this background, the total production of OPEC approached eight-year maximum - 32.76 million barrels a day. Refusal of Iran to discuss the production freezing before the country’s oil export returns to pre-sanctions level triggered the failure of the April 17 agreement in Doha, when at the last moment the Saudis have interrupted the consultations due to disagreements with the Iranian colleagues.

Iran returns to the market faster than it was previously forecasted, Neil Atkinson, head of oil markets department of the IEA, said in his interview to Bloomberg last week. The increase in oil supply by Iran offsets the production decline in Venezuela and Nigeria, noted the expert.

However, while the oil reserves remain high, especially in the US, which ranks the first in the world in terms of oil consumption, it will affect prices, the energy companies warn.