Iran is preparing to ramp up global oil sales as talks to lift sanctions show signs of progress. But even if a deal is struck, the flow of additional crude into the market may be gradual.
State-controlled National Iranian Oil Co. has been priming oil fields -- and customer relationships -- so it can increase exports if an accord is clinched, officials said. In the most optimistic estimates, the country could return to pre-sanctions production levels of almost 4 million barrels a day in as little as three months. It could also tap a flotilla’s worth of oil that’s hoarded away in storage.
But there are still many hurdles to overcome before than can happen. Any agreement must fully dismantle the gamut of U.S. barriers on trade, shipping and insurance involving Iranian entities. Even then buyers may still be reluctant, according to Mohammad Ali Khatibi, a former official at NIOC.
“Our return may be a gradual process rather than swift and sudden -- it can’t happen overnight,” Khatibi said in an interview. It may be “a protracted process, in part due to the coronavirus pandemic that’s significantly hurt demand.”
The pace of Iran’s comeback may prove critical for the global oil market. While fuel consumption is on the rebound, it remains depressed by lockdowns and new virus outbreaks. Extra Iranian supplies would impose a burden on its counterparts in the OPEC+ alliance, which has toiled for more than a year to clear a lingering supply glut.