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 3,800,000 bpd in February 2017—compared to the previous month. Production rose 0.5% month-over-month and 24.6% year-over-year. Iran’s crude oil production is at the highest level in seven years.
Iran was able to increase its production after the US lifted sanctions on the country in January 2016. A rise in crude oil supplies from Iran would have a negative impact on crude oil (ERX) (XOP) (ERY) prices. For more on crude oil prices, read Part 1 of the series.
Lower crude oil prices have a negative impact on crude oil and gas producers’ earnings like National Iranian Oil Company, ConocoPhillips (COP), Chevron (CVX), Carrizo Oil & Gas (CRZO), and Comstock Resources (CRK).
Iran’s crude oil export
In February 2017, Iran exported 3 MMbpd (million barrels per day) of crude oil in a single day. It’s the highest level since 1979, according to Bloomberg surveys. Exports averaged 2.5 MMbpd in February 2017. Iran targets to produce 5 MMbpd by 2021. The rise in foreign capital investment in oil and gas exploration and production activity will support oil production.
Iran’s crude oil production strategy
Iran targets production of 4 MMbpd by April 2017, according to the National Iranian Oil Company. The company estimates that Iran targets to produce 4.7 MMbpd of crude oil by 2022. Iran plans to drill 500 new wells over the next five years. Iran’s crude oil production averaged 3.5 MMbpd (million barrels per day) and 2.8 MMbpd in 2016 and 2015, respectively.
Iran is OPEC’s (Organization of the Petroleum Exporting Countries) third-largest crude oil producer after Saudi Arabia and Iraq. Iran was exempt from the production cut after major producers’ production cut deal. Read Producers’ Production Cut Deal: Will the Extension Happen? for the latest updates on major oil producers.
Any rise in crude oil production from Iran will pressure crude oil (FXN) (UCO) (RYE) prices.
Next, we’ll analyze Iraq’s crude oil production and its impact on the oil market.