Iran’s crude oil production

The EIA (U.S. Energy Information Administration) estimates that Iran’s crude oil production rose by 20,000 bpd (barrels per day) to 3,720,000 bpd in December 2016—compared to the previous month. 

Iran’s crude oil production averaged 3.5 MMbpd (million barrels per day) and 2.8 MMbpd in 2016 and 2015, respectively. Iran was able to increase its production after the US lifted the sanctions on the country. A rise in crude oil supplies from Iran would have a negative impact on crude oil (BNO) (XLE) (ERY) (ERX) prices. For more crude oil prices, read Part 1 and Part 4 of this series.

On February 3, 2017, Trump’s Administration ordered new sanctions against some Iranian individuals and entities as Iran tested a ballistic missile. It could raise geopolitical tensions between the US and Iran. It would have a negative impact on Iran’s crude oil production and supplies.

President Trump Could Impact Iran’s Crude Oil Production

Iran’s crude oil production strategy

National Iranian Oil Company reported that Iran targets production of 4 MMbpd by 2017. However, many analysts think that Iran isn’t investing heavily enough to increase its crude oil production.

Impact

Iran was exempt from the production cut after the production cut deal. As a result, Iran sold ~13 million barrels of crude oil kept in large oil tankers in December 2016 and early January 2017. For the latest updates on major oil producers, read Reality Check: Major Oil Producers’ Output Cut Plans.

Any rise in crude oil production from Iran will put a lid on crude oil (FENY) (XES) (USO) (RYE) prices. Moves in crude oil prices impact on oil producers such as Matador Resources (MTDR), Chevron (CVX), SM Energy (SM), and Bonanza Creek Energy (BCEI).

In the last part of this series, we’ll take a look at some crude oil price forecasts.

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