Deputy Oil Minister Rokneddin Javadi, who is also head of the Iranian National Oil Company announced the increase on Monday.
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World oil prices rebounded Monday from new 12-year depths struck after the West lifted sanctions on Iran, paving the way for higher crude exports from the Islamic Republic.
Brent Crude – the global benchmark – fell below $28 a barrel for the first time since November 2003 before closing at $28.69.
“In the wake of removal of sanctions, Iran is prepared to increase its crude output by 500,000 barrels per day”.
Based on investment bank projections that crude prices could fall to $25, $20 or even $10 a barrel (Bbl), the IEA said prices can indeed go lower than the current $30/Bbl – a 12-year low level. And those differences have grown only more acute as low prices have split OPEC and as tensions have grown more heated between the Saudis and the Iranians over sectarian conflicts in places such as Yemen and Syria.
Steelmakers and automakers may be in line to benefit from the lifting of the economic sanctions as Korean steel plates would gain a footing in Iran as automakers there import a huge chunk of parts.
“It seems to be a healthy upside correction in an otherwise downtrending market”, said Tamas Varga, oil analyst at London brokerage PVM Oil Associates. This has brought about speculation of further easing measures by Chinese officials, helping to boost shares from Shanghai to the United States, and along with it industrial metals and oil.
The impact of Western sanctions caused Iranian production to drop about 1 million barrels a day in recent years and blocked Iran from importing the latest Western oil field technology and equipment.
Hellenic Petroleum is estimated to owe $550-600 million for oil it bought from Iran but was unable to pay when the global embargo was imposed, a source close to discussions between Iran and Greece told Reuters last month.
Iran, in principle, may now sell oil to its former customers in Europe and elsewhere. The dollar is widely used for oil trading. Given the already low oil prices, this could lead to a more gradual ramp-up in exports.
Prices have crashed about 75 percent since mid-2014, hit by a ideal storm of a supply glut, weak demand, a slowing global economy and a strong dollar. Production including returning OPEC member Indonesia fell by 210,000 bpd to 32.18 million bpd in December, the report said, citing secondary sources.
Many forecasting groups agree with OPEC that production growth outside the organization will fall as companies defer or cancel projects.
“The run up to this weekend’s announcement has likely contributed to the recent decline in oil prices”, Goldman Sachs said.
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In its most recent assessment, OPEC forecast that non-OPEC production would diminish in 2016 by 660,000 barrels, after forecasting only months ago that the difference from 2015 to 2016 would be just 270,000 barrels.
