Bloomberg

London

Iran, once Opec’s second-largest oil producer, will be unable to sustain an increase in crude exports that support its economy when some measures to curb those shipments are eased, the International Energy Agency said.

The European Union said last month that it intends to suspend a ban in December or January on insuring tankers carrying Iranian oil. The US said it will stop forcing buyers to cut purchases, even if they still aren’t allowed to increase them. The concessions are in return for commitments from the Persian Gulf state to provide more information on its nuclear program, which western powers claim is intended to make weapons. Neither the EU nor the US lifted sanctions on importing the nation’s oil.

“The fact that the oil sanctions remain fully in place leaves on the face of it no room for any sustained increase in exports,” the IEA, a Paris-based adviser to 28 nations, said in a report yesterday. “Even if sanctions on Iranian oil were eventually relaxed, meaningful increases in production would require a longer period and additional investment in Iran’s upstream, and thus would take time to materialise.”

Iran’s oil shipments to other nations rose by 89,000 bpd to 850,000 bpd in November, the IEA said, including both crude and condensates. The country cut the amount of oil stored on tankers to 22mn barrels by the end of the month from 37mn barrels in October, the agency said.

Iran produced 3.5mn barrels of crude a day at the start of 2012, before EU sanctions took effect, ranking it second among members of the Organisation of Petroleum Exporting Countries, behind Saudi Arabia, data compiled by Bloomberg show.

The IEA estimated Iran’s daily crude production at 2.71mn barrels in November, up 30,000 barrels from October, and ranking it sixth within Opec, after Saudi Arabia, Iraq, the UAE, Kuwait and Venezuela.

Iran sold $84.38bn of crude oil in 2011, according to data from ITC TradeMap, a venture between the World Trade Organisation and the UN. Its total exports of goods fetched $130.5bn in the same year, the data show.

“As far as oil is concerned, the Geneva deal, regardless of its political significance, has not been the watershed moment some had hoped for,” the IEA said. “The market reaction to the deal, announced during the weekend lull in trading, was muted: a brief intraday dip in futures prices on the following Monday.”

Iran plans to meet international oil companies as soon as March to entice investors to its energy industry once world powers ease sanctions, Bijan Namdar Zanganeh, the nation’s oil minister, said December 4, adding he hoped Exxon Mobil, Royal Dutch Shell, BP, Eni and Statoil will invest in the country. The chairman of NITC, Iran’s biggest tanker owner, said two days earlier he hoped agreement would ease sanctions on the company’s fleet.

 

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