Baku, Azerbaijan, July 23
By Aygun Badalova - Trend:
Iran with having adequate investment could increase its oil production to 6 million barrels a day (bpd) and export 4.5 million bpd, a professor of economics at U.S. Northeastern University Kamran Dadkhah believes.
Dadkhah told Trend that Iran could increase its oil production after the sanctions are lifted but the addition volumes cannot be substantial.
"Indeed within the first two years the additional output would be between one and two million barrels a day, he said. But after that, assuming adequate investment, in 5-7 years Iran could increase its oil production to 6 million barrels a day and export 4.5 million barrels a day."
With regard to the oil prices, Dadkhah believes that given the present situation in the market, there is little expectation of oil price increase to previous levels of $100 and more.
"In particular, the use of shale oil, fracking, Mexico opening its fields to private investment, and Saudi Arabia being adamant in not losing its market share guarantee that there will adequate oil supply. Of course if there is a major war in the Middle East with destruction of oil fields the story may be different," Dadkhah said.
He also said that given this background, and given that in the short run the increase in Iran's oil production will be modest, we should not expect drastic effects. In the long run, the increase in Iran's oil production will keep prices stable, he believes.
With the regard to the issue of how Iran will solve the quota issue with other OPEC member states when the country's production is increased, Dadkhah believes that there are no reasons to worry about it.
"Since the 1970s the power of OPEC in influencing the oil market has been exaggerated. The quota system didn't have much effect since members did not abide by it and increased their production and exports when they could. So we should not worry about OPEC," Dadkhah said.
Iran and the P5+1 have reached a nuclear deal after more than a decade of on-off negotiation, granting Tehran sanctions relief in exchange for curbs on its nuclear program.
The agreement aims to limit Iran's nuclear work for more than a decade in exchange for the gradual suspension of sanctions that have slashed Iran's oil exports and crippled its economy.
Iranian authorities said that the country's oil supply could be doubled from the current 1.2 million barrels per day to 2.3 million barrels if the sanctions are lifted. Earlier Iran said that OPEC member states should make room for Iran to allow it to increase the export and called for returning to the individual quotas for oil production for the cartel's members.
Currently, OPEC's quota for oil production is 30 million barrels per day.