Iranian oil production climbed last month by the most in almost 2 decades following a end of international sanctions, based on OPEC.
Iran increased output by 187,800 barrels a day to three.13 million a day in February, the largest monthly gain since 1997, the business of Petroleum Exporting Countries said in the monthly report. Supply from Saudi Arabia, Qatar and Venezuela — which tentatively agreed with Russia last month to keep output steady — was mostly unchanged. The group lowered estimates for that quantity of crude it’ll need to supply this year amid slower declines being produced outside the organization.
Iran plans to boost crude output to 4 million barrels each day, the greatest level since 2008, before considering joining other suppliers in re-balancing the market, Oil Minister Bijan Zanganeh said on Sunday, based on the Iranian Students News Agency. Iran insists it should restore production to pre-sanctions levels before joining any agreement to freeze output, Russian Energy Minister Alexander Novak said on Monday after meeting Zanganeh in Tehran.
“Iran managed to get clear that it only promises to join the oil production cap once it has reached a production level of 4 million barrels each day,” analysts at Commerzbank AG led by Eugen Weinberg said in a report. “This reduces the chances of any wide-scale agreement on production caps.”
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Estimates Trimmed
The OPEC report made no mention of Feb. 16 accord to “freeze” output, nor to ongoing talks targeted at garnering support from other producers to participate.
OPEC trimmed estimates for the amount of crude it will need to supply this year by about 100,000 barrels a day, to 31.52 million each day. That’s almost 800,000 a day less than current production levels.
The group’s 13 members pumped 32.28 million barrels each day in February, a drop of 174,800 each day in the previous month, as declines in Iraq and Nigeria more than counterbalance the rise in Iran, based on the report, citing media and forecasting institutions it describes as secondary sources. Iraq’s production was disrupted by the closure of their northern export pipeline to Turkey, while Nigeria’s was curbed by a halt in loadings of their Forcados grade.
U.S. Output
The reduced projections for OPEC’s crude may be the result of a stronger-than-expected performance elsewhere. The group increased estimates for non-OPEC supply in 2015 and 2016 by 100,000 barrels a day for every year. Non-OPEC output within the first quarter was 400,000 a day higher than the business previously estimated.
“There has been a reduction in production costs, mainly in the U.S., as well as increased hedging, with producers choosing to produce with losses instead of stopping production,” the group said.
Production in Russia, OPEC’s partner in the freeze talks, will be 100,000 barrels a day higher this quarter in contrast to your fourth quarter of 2015 at 11 million each day, before sliding for the rest of 2016 to become flat overall for the year, according to the report.
Bloomberg News
