- Iran output rises 187,800 b/d to 3.13 million b/d in February
- Members involved in `freeze' talks keep production steady
Iranian oil production climbed last month by the most in almost two decades following the end of international sanctions, according to OPEC.
Iran increased output by 187,800 barrels a day to 3.13 million a day in February, the biggest monthly gain since 1997, the Organization of Petroleum Exporting Countries said in its monthly report. Supply from Saudi Arabia, Qatar and Venezuela -- which tentatively agreed with Russia last month to keep output steady -- was mostly unchanged. The group lowered estimates for the amount of crude it will need to provide this year amid slower declines in production outside the organization.
Iran plans to boost crude output to 4 million barrels a day, the highest level since 2008, before considering joining other suppliers in re-balancing the market, Oil Minister Bijan Zanganeh said on Sunday, according to the Iranian Students News Agency. Iran insists it should restore production to pre-sanctions levels before joining any agreement to freeze output, Russian Energy Minister Alexander Novak said on Monday after meeting Zanganeh in Tehran.
“Iran made it clear that it only intends to sign up to the oil production cap once it has reached a production level of 4 million barrels a day,” analysts at Commerzbank AG led by Eugen Weinberg said in a report. “This reduces the chances of any wide-scale agreement on production caps.”
The OPEC report made no reference to the Feb. 16 accord to “freeze” output, nor to ongoing talks aimed at garnering support from other producers to participate.
OPEC trimmed estimates for the amount of crude it will need to provide this year by about 100,000 barrels a day, to 31.52 million a day. That’s almost 800,000 a day lower than current production levels.
The group’s 13 members pumped 32.28 million barrels a day in February, a drop of 174,800 a day from the previous month, as declines in Iraq and Nigeria more than offset the increase in Iran, according to the report, citing media and forecasting institutions it describes as secondary sources. Iraq’s production was disrupted by the closure of its northern export pipeline to Turkey, while Nigeria’s was curbed by a halt in loadings of its Forcados grade.
The reduced projections for OPEC’s crude is the result of a stronger-than-expected performance elsewhere. The group increased estimates for non-OPEC supply in 2015 and 2016 by 100,000 barrels a day for each year. Non-OPEC output in the first quarter was 400,000 a day higher than the organization previously estimated.
“There has been a reduction in production costs, mainly in the U.S., as well as increased hedging, with producers choosing to produce with losses rather than stopping production,” the group said.
Production in Russia, OPEC’s partner in the freeze talks, will be 100,000 barrels a day higher this quarter compared with the fourth quarter of 2015 at 11 million a day, before sliding for the rest of 2016 to be flat overall for the year, according to the report.