Iran struggling to boost oil production after lifting of sanctions
...Iran could find itself back in the sanction box if it continues its development of long-range rockets in violation of UN restrictions. Congress is already pushing for the imposition of new sanctions. Combine that with their current lack of expertise and the reluctance of many oil service companies to take a chance on them and their recovery has been much slower than expected.
The most significant development, and perhaps the most meaningful for the oil market, is happening in Iran. Last month, Iran’s crude-production grew by 220,000 barrels a day, and is still shy of the daily half-million barrels Iran has promised to pump quickly into the market. Iran expects to produce another million a day after that initial ramp up.
The expected production increase by Iran following the end of international sanctions in January is one of the heaviest market forces weighing on crude prices now, because it could easily disrupt the market’s natural rebalancing process this year. But if Iran comes up short because of trouble restarting its shut-in oil fields, it could be a manageable amount of oil, coming on at a manageable speed, for the oil market.
“Iran’s return to the market has been less dramatic than the Iranians said it would be,” the IEA said. “Provisionally, it appears that Iran’s return will be gradual.”
OPEC has long held it won’t make room for Iran by cutting production. But a series of unintended production outages in Iraq, Nigeria and the United Arab Emirates has, in fact, allowed Iran’s production burst in February to register as an overall decline in OPEC production.