Iran risks having its massive crude oil assets become stranded unless the United States lifts the sanctions that the Trump administrations imposed on Tehran three years ago, Reuters has reported, noting the sanctions have prevented the country from boosting its production capacity as other major producers have done.
Iran said last month it was already beginning to ramp up crude oil production in anticipation of the removal of sanctions, but this has yet to happen as the Biden administration has tied the removal to Iran suspending its uranium enrichment program.
Exports were also on the rise, oil minister Bijan Zanganeh said in January, noting, "I am not worried about regaining Iran's lost oil market share, and oil buyers do not limit themselves to one or two sellers." If the U.S. sanctions were lifted, he said, "We will return to the market stronger than before, sooner than you might think."
According to Reuters' Bozorgmehr Sharafedin and Roslan Khasawneh, Iran doesn't have much time to regain and boost its market share: most oil demand forecasts suggest the world's oil consumption will peak within the next couple of decades. This means Iran will need to quickly adjust to a world that needs a lot less oil but a lot more alternative energy sources, the Reuters authors said.
"The dominant narrative is still to keep production optimal long-term - without realising time is running short - and to avoid exporting oil as raw material - without appreciating the refining business may not be a profitable business in the long-term anyway," said Iman Nasseri from energy consultancy FGE, as quoted by Reuters.
Iran is among the top five oil producers in the world in terms of reserves and, according to the oil ministry, could ramp up production this year to between 3.9 and 4 million bpd.
By Charles Kennedy for Oilprice.com
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