Iran can boost oil production in one week after international sanctions are lifted, and OPEC’s refusal to accommodate Iran in export markets would result in lower crude prices, Oil Minister Bijan Namdar Zanganeh said.
Production can increase by 500,000 barrels a day within a week after sanctions end and by 1 million barrels a day within a month following that, state-run Islamic Republic News Agency reported, citing Zanganeh in an interview with state TV. Sanctions against Iran’s oil industry should be lifted by late November, he said, according to Iran oil ministry’s Shana news agency.
Oil producers such as BP Plc and Royal Dutch Shell Plc have expressed interest in developing Iran’s reserves, the world’s fourth-biggest, once sanctions are removed. Iran is organizing a conference in London in December to discuss new oil contract models with international companies. Iran had the second-biggest output in OPEC before U.S.-led sanctions banned the purchase, transport, finance and insuring of its crude began July 2012.
“Our lost share of the market, which was about 1 million barrels a day, will manifest itself,” Zanganeh said, according to IRNA. Even if crude prices fall, Iran’s government revenue from oil will stay the same because exports are due to double, he said, according to Shana.
Under the nuclear agreement Iran and six world powers reached in Vienna last month, the U.S. agreed to end efforts to limit Iran’s oil sales. The European Union said it would end the bloc’s embargo on imports once Iran complies with obligations to scale back its nuclear program.
Iran, the third-largest producer in the Organization of Petroleum Exporting Countries, produced an average of 2.85 million barrels a day in July compared with 3.6 million at the end of 2011, according to estimates compiled by Bloomberg.
Crude’s recovery from a six-year low earlier this year has faltered as leading members of the Organization of Petroleum Exporting Countries pump at record levels to defend market share amid surplus supply from the U.S. and Russia. Brent crude, the global benchmark, fell about 50 percent last year and dropped 2.1 percent on Friday to $52.21 a barrel on the London-based ICE Futures Europe exchange.
Banks including Citigroup Inc. and Goldman Sachs Group Inc. have said global oil markets won’t feel the impact of Iran’s historic deal with world powers until 2016 as sanctions remain in place while nuclear inspectors go to work.
Iranian oil exports declined to 1.4 million barrels a day on average last year due to sanctions, the U.S. Energy Information Administration said June 24 on its website. Sales averaged about 2.6 million barrels daily in 2011 before sanctions, according to the EIA.