Oil production in Iran has dropped to a new low in February with crude output falling by 50,000 bpd to 3.38mn bpd, according to the International Energy Agency (IEA).
Western sanctions against Iran’s nuclear programme are really starting to bite and Iran’s hydrocarbon industry has already been suffering from years of underinvestment.
The IEA data for February revealed that Iran posted its lowest output level since late 2002. Late last year, the IEA forecast that Iranian production capacity would decline by 890,000 bpd to just under 3mn bpd by 2016 as a result of tighter sanctions.
Iranian Oil Minister Rostam Qasemi countered that the IEA's figures and estimates were incorrect and that neither production levels nor exports have fallen. Speaking in Kuwait recently, where he was attending the International Energy Forum, Qasemi said Iran is "exporting what we are supposed to within OPEC."
There is the distinct possibility that Iranian output could fall even further this year. In its monthly market report, the IEA said that from July onwards -- when a European Union (EU) oil embargo comes into effect -- Iranian exports could be cut by around 800,000 bpd to 1mn bpd, about a third of the current total.
"Iran will be casting around trying to find buyers for 800,000 to 1 million barrels," said David Fyfe, head of the IEA's market and industry division, adding that potential reductions in oil exports "could be much bigger than that."
The IEA based its figures on the 500,000-600,000 bpd of oil Iran exported to the EU before sanctions hit and the assumption that its other buyers would also scale back volumes in order to avoid breaching the sanctions.
