Fears that Iran will flood the oil markets with its crude now that Joe Biden is set to take office are unfounded, OPEC’s Secretary General Mohammed Barkindo told Gulf Intelligence Global UAE Energy Forum 2021 on Wednesday.
“Rest assured, there is no need for the market to be of heightened concern at the moment,” Barkindo said in an effort to calm those fears, adding that they were following the developments closely.
Iran’s oil production is not currently limited by OPEC’s production cut agreement—only by U.S. sanctions on its exports.
The fears that Iran could possibly ramp up crude oil production come after six consecutive increases in OPEC’s crude oil production, with the group responsible for production 25.59 million bpd of oil in December, according to the most recent Reuters survey. December’s increase over November was mostly due to another OPEC member that is not bound by the production cut agreement—Libya.
But Saudi Arabia last week invigorated oil markets by agreeing on its own to voluntarily cut another million barrels per day of oil production, in addition to the limits imposed on it through the agreement.
Iran is currently producing just under 2 million barrels per day, according to OPEC’s most recent Monthly Oil Market Report. But Iran’s average crude production in 2019 was 2.356 million barrels per day, while it was still under sanctions. In 2018, before the sanctions, Iran produced an average of more than 3.5 million barrels per day.
And oil demand is still lagging, so a spooked market would understandably be so at the thought of a potential increase of more than a million barrels per day, completing offsetting Saudi Arabia’s promise to cut an extra million barrels.
"We have established a record of continuously adapting ... being flexible and addressing issues as they emerge," Barkindo said.
By Julianne Geiger for Oilprice.com
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