Iran Oil Output Faces Race Against Time as US Sanctions Linger
Iran
Asharq Al-Awsat
Iran’s oil reserves risk becoming stranded assets unless the new US administration eases sanctions that have left the country lagging rivals in output capacity and losing a race against time as the transition to low carbon energy gathers pace. Iran relies heavily on oil revenue but sanctions have prevented it from pumping at anywhere near capacity since 2018. The penalties were tightened under former US president Donald Trump and although the new President Joe Biden is more conciliatory, top officials in his administration have said Washington would not take a quick decision on any deal with Iran. Iran’s leadership said sanctions have only delayed the moment when it will produce the oil in its vast reserves - and that the world will eventually need it. But the increasing pace of the global energy transition to lower carbon fuels, combined with the impact of the COVID-19 pandemic on energy demand, have brought forward forecasts for when the world will hit peak demand - the point beyond which consumption will permanently fall, Reuters reported. Some Iranian officials, including the oil minister Bijan Zanganeh, have said repeatedly Tehran needs to maximize production rapidly - before oil demand disappears and rival producers take what’s left of market share. That idea, however, has been pushed back by factions who see it as a betrayal of future generations. “The dominant narrative is still to keep production optimal long-term - without realizing time is running short - and to avoid exporting oil as raw material - without appreciating the refining business may not be a profitable business in the long-term anyway,” said Iman Nasseri, managing director for the Middle East with FGE energy consultancy. Following Biden’s election, Iran’s government under President Hassan Rouhani instructed the oil ministry in December to prepare installations for the production and sale of crude oil at their current full capacity within three months. Provided sanctions are lifted, analysts say Iran could increase output from the current 2.1 million barrels per day (bpd) to a pre-sanctions level of 3.8 million bpd within months. But Iran’s parliament last week rejected a draft budget based on output of 2.3 million bpd from the Iranian year that starts in March, as the lawmakers cast doubt on any immediate relief from the sanctions.
from Asharq AL-awsat https://english.aawsat.com/home/article/2806786/iran-oil-output-faces-race-against-time-us-sanctions-linger
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