Iran has managed to pump more of its oil back into Asia and Europe than it originally promised, surprising skeptics and laying the groundwork for a Mideast market-share clash — or a truce.
Iran’s crude exports climbed to 2.35 million barrels a day in April,
according to consulting firm Genscape, more oil than U.S. drillers pump in South Texas’ Eagle Ford Shale and North Dakota’s Bakken Shale put together.
The sharp increase of 660,000 barrels a day compared to March — and 1.2 million barrels a day since January — puts Iran above its planned export target just three months after western powers lifted strict economic sanctions against Iran.
“Iran has been waiting for this moment for years and they made the best of it,” said Amir Bornaee, an analyst at Genscape who tracks oil vessels.
Many analysts had said Iran would fall short of its goal because its oil fields fell into disrepair in the three years that the West had sanctioned Iran’s oil exports.
Some attribute the recent rise in Iran’s exports to a collection of vessels kept near the country’s coastline, but Bornaee says many of those tankers are still there, storing oil.
Still, it is not clear how much of Iran’s oil came from the more than 30 million barrels it had stored onshore, and how much came from its oil fields.
Iranian officials have been courting western oil companies and amending drilling contracts in a push to attract investments in its fields, so it’s possible Iran is selling its stored oil in an effort to reach its export goal quickly.
That way, Iranian officials could be ready to call a truce in the ongoing market-share war by the time the Organization of Petroleum Exporting Countries meets in early June.
“There’s a lot of posturing going on ahead of the OPEC meeting,” said Andy Lipow, president of Lipow Oil Associates in Houston.
OPEC, Russia and others failed to reach an agreement last month to cap their production levels when Saudi Arabia balked at Iran’s refusal to join the freeze.
One reason Iran’s surge in crude exports hasn’t sent oil prices down is because other countries like Canada, Nigeria and Libya have recently suffered production outages.
The International Energy Agency on Thursday said Nigeria’s output has fallen to a two-decade low amid attacks on its energy infrastructure, and Canada has shut in 1.2 million barrels a day of production amid devastating wildfires, though the outage is expected to be temporary.
Global oil demand is growing faster than anticipated at 1.4 million barrels a day, and production outside of OPEC is expected to fall 800,000 barrels a day, the IEA said, in a sign there are many market forces offsetting Iran’s return to the oil market.
According to Genscape, Saudi Arabia lowered its oil exports by 700,000 barrels a day last month to 6.9 million, its first decline in exports this year. But Saudi officials have recently signaled the world’s largest oil-producing nation is gearing up to ramp up its output.
“Until everyone freezes (oil production), these two countries (Iran and Saudi Arabia) aren’t likely going to slow down,” Bornaee said.http://fuelfix.com/blog/2016/05/12/iran-oil-export-surge-adds-another-bakken-to-the-global-glut/