Why Iran's exports fell at faster rate than production?

Oil&Gas Materials 17 January 2019 14:35 (UTC +04:00)

Baku, Azerbaijan, Jan.17

By Leman Zeynalova – Trend:

By December 2018, Iranian crude oil production has declined by more than 1 million barrels per day (b/d) from first quarter of 2018, Trend reports citing the Short-Term Energy Outlook (STEO) of the US Energy Information Administration.

After the May 2018 announcement of the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA) and reinstatement of sanctions on Iran in November 2018, EIA estimates that Iranian crude oil and condensate production decreased significantly.

The report reads that domestic Iranian consumption grew concurrently, as refineries increased output rates and power plants switched from natural gas to crude oil for electric power generation. “For this reason, Iran's exports have fallen at a faster rate than production.”

EIA assumes that U.S. sanctions on Iranian oil exports will remain in place through the end of the forecast period. Furthermore, the current forecast reflects an expectation that reduction exemption waivers issued to eight countries to continue buying Iranian oil will not be extended past May 2019.

Iran holds some of the world’s largest deposits of proved oil and natural gas reserves, ranking as the world’s fourth–largest and second–largest reserve holder of oil and natural gas, respectively. Iran also ranks among the world’s top 10 oil producers and top 5 natural gas producers.

Iran produced almost 4.7 million barrels per day (b/d) of petroleum and other liquids in 2017 and an estimated 7.2 trillion cubic feet (Tcf) of dry natural gas in 2017.

US President Donald Trump declared Washington’s withdrawal from the nuclear deal with Iran in May 2018. Trump also announced the restoration of all sanctions against Iran, including secondary ones against other countries doing business with Iran. The United States re-introduced part of the sanctions against Iran on August 7, 2018, while the second batch of the sanctions came into effect on Nov.5, 2018.

The US government has agreed to let eight countries, including South Korea and Japan, as well as India, keep buying Iranian oil after it reimposes sanctions on Tehran. The waivers have been granted for six months.