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Will Seasonality Factors and OPEC Influence Crude Oil Futures?

PART:
1 2 3 4 5
Part 4
Will Seasonality Factors and OPEC Influence Crude Oil Futures? PART 4 OF 5

Iran’s Crude Oil Production at 8-Year High

Iran’s crude oil production

Iran is the third-largest crude oil producer among OPEC members. The EIA (U.S. Energy Information Administration) estimates that Iran’s crude oil production rose by 10,000 bpd (barrels per day) to 3.8 MMbpd (million barrels per day) in July 2017 compared to the previous month. Production rose 0.3% month-over-month and 4.9% year-over-year. Production is at an eight-year high. Production rose after the US lifted sanctions on Iran in January 2016.

Any rise in production from Iran could have a negative impact on crude oil (FXN) (FENY) (IXC) prices. Volatility in crude oil prices affects oil and gas producers like Bill Barrett (BBG), Chevron (CVX), Hess (HES), and Bonanza Creek Energy (BCEI).

Iran’s Crude Oil Production at 8-Year High

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Iran’s crude oil and condensate exports

Iran’s crude oil and condensate exports are expected to hit 2.37 MMbpd in August 2017, according to Reuters, which would be 4% lower from the same period in 2016.

Reuters estimates that crude oil and condensate exports to Asia will rise by 5% to 1.7 MMbpd in August 2017. However, exports to Europe and India are expected to fall in August 2017. Exports to China are at an 11-month high due to lower Iranian crude oil prices. Asia, China, India, Japan, and South Korea are major importers of Iranian crude oil.

Iran’s crude oil production plans 

Iran is planning to increase its crude oil production by 200,000 bpd by December 2017. Consequently, Iran’s crude oil production would hit four MMbpd. Iran was allowed a small production increase in the production cut deal.

Iran plans to ramp up production by 700,000 bpd to 4.7 MMbpd by 2021. Production averaged 3.5 MMbpd and 2.8 MMbpd in 2016 and 2015, respectively. High production from Iran could weigh on crude oil (IXC) (IYE) (IEZ) prices.

In the next part, we’ll discuss some crude oil price forecasts.

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