Opec secretary-general Mohammed Barkindo said today that the prospect of a sharp increase in Iranian crude production later this year is not yet a cause for concern.
"I cannot pre-empt what will happen, we are also following very closely these developments, but rest assured there is no need for the market to be of heightened concern at the moment," Barkindo told the Persian Gulf Intelligence Global UAE Energy Forum.
The upcoming inauguration of US president-elect Joe Biden on 20 January could pave the way for US sanctions on Iran to be eased and unleash considerable amounts of Iranian crude onto the market within months. Meanwhile, Iran has been pressing ahead with plans to build its crude production capacity, with state-owned oil company NIOC and subsidiaries recently awarding their third batch of upstream development contracts to domestic companies since early 2019.
Iran produced around 2mn b/d of crude in December, according to Argus estimates, compared with 3.3mn b/d in October 2018, the month before the US re-imposed sanctions. Increased supply from Iran could create a challenge for the Opec+ alliance, which scrapped a plan to raise its collective output quota by 2mn b/d this month and opted for a more moderate 500,000 b/d increase instead.
"We have established a record of continuously adapting, continuously being flexible and addressing issues as they emerge," Barkindo said.