many of the sanctions against Iran's oil
industry have been lifted but how fast
can the powerful OPEC producer ramp up
production and exports joining me to
discuss this is Richard Mallinson at
consultancy energy aspects Richard
Iranian officials have in recent days in
recent months talked about ramping up
production immediately after the lifting
of sanctions by 500,000 barrels a day
how realistic is this well clearly the
Iranian government's got some pretty
ambitious plans but I think they're
going to have a little more of a gradual
recovery they're depending on two things
one is to take existing fields and ramp
up the amount that those are producing
and the second is to bring several new
fields online but with the existing
fields they face years without Western
technology Western investment and i
think that the maintenance state of
those fields may limit how much they can
bring back overnight with the new fields
we've seen several years of delays and i
think they're not necessarily all going
to be ready yet what are your estimates
for the increase in production and also
exports so I think over the next couple
of months we'll see Iranian production
going up by say 250 to 400 thousand
hours a day depending on how many of
those new fields come online and I think
almost all of that is going to go into
the export market because of present the
domestic market is well supplied but its
exports that they really want to target
they really want to increase it's about
then can they find the buyers can they
as they get back into markets like
Europe other parts of Asia how easy is
it to market their crude and to displace
other exporters we can see from this
chart here that production and exports
have really taken a hit under sanctions
but any any increase from here on it you
know what effect will that have on price
well yes as we can see before the latest
round of sanctions the ones that have
been lifted were implemented around was
producing about 3.6 million barrels a
day and exports were closer to two
million barrels a day that fell off a
long way and Iran wants to bring all of
that back as quickly as it can the oil
markets already oversupplied it has been
for quite a long time and that's what's
really driven prices lower and the
quicker and the more that Iran
bring back into the market the more
pressure it will put on prices and
certainly at the moment the focus or the
concern in the oil market is that
they're going to be a large return very
rapidly but I think of as we get later
in the year and we get a better picture
of the Iranian recovery it's only going
to be one of several moving parts we're
also going to be looking at the declines
in US production the extent to which the
rest of non-opec supply is going down
and of course what other OPEC members
are able to do and just on that point
oil oil prices are around thirty dollars
a barrel so what happens when you know
you throw Saudi Arabia and other big
golf producers into the mix because they
have shown no signs of relenting you
know how does that competition play out
now well I think from my point of view
this thirty dollar price is not
sustainable for the global market in the
long run but all of the OPEC producers
are generally putting as much oil as
they can into the market that's in part
about just generating whatever revenues
they can to meet their budget but it's
also about market share we've seen Saudi
Arabia and Iraq increase their
production significantly last year and
they're going to want to sustain those
levels even if they can't necessarily
increase production further but they've
also been putting oil into markets
particularly in Europe where they
anticipate Iran is going to want to
return so they're trying to get in there
ahead of time and prevent or make it
more difficult for Iran to win those
buyers back and I think what we're
likely to see is Iran particularly but
also Iraq willing to offer discounts to
offer favorable terms to try and lure
buyers away from Saudi Arabia and the
other Gulf states and none of that is
going to make life within OPEC any more
comfortable or any more diplomatic you
know speaking to some of the Iranian
officials they've said that they are not
very keen to lose out on price so what
other tactics could they deploy is it
sort of oil for goods or other sorts of
tactics that means that they may try and
get ahead that way well this is a
dilemma for Iran on the one hand it
knows that to lure buyers back it needs
to offer something attractive a
favorable terms but on the second on the
other hand especially at current prices
if it won't if it offers cash this
gowns that's going to eat into the
revenue it desperately needs for its
budget so I think we will see them
looking at what creative ways can they
build buying relationship so exchange is
favorable terms for instance longer
payment terms so the price is there but
refiners have a little bit longer before
they need to meet that bill which can
really help them with cash flow but all
of it I think is also going to be
complicated by the US sanctions that
remain in place in particular the ones
that will make it difficult for Iran to
sell and transact in dollars because no
US bank can be any part of a transaction
Thank You issued
you