Iran's oil output slumps to new low
Crude production in Iran declined to 2.28 million barrels per day (mbpd) in June, according to the Oil Market Report from the International Energy Agency (IEA).
The production in Iran declined by 120 thousand b/d, "hovering at a three decade low as the U.S. seeks to eliminate Iranian exports," the agency said.
On the average, Iran's oil exports were 2.6 mbpd before U.S. President Donald Trump in May 2018 withdrew the United States from a 2015 nuclear deal with Iran and reimposed sanctions.
China and India. which are largest buyer of crude oil from Iran, turned to other suppliers, the agency believes.
Saudi Arabia, Iraq and Russia boosted sales to China, while India increased oil imports from the U.S. and the UAE. If in January, the UAE supplied 200,000 bpd to China, the in June the number reached 600,000 bpd.
A leading analyst of the National Energy Security Fund, a lecturer at the Financial University under the Government of the Russian Federation, Igor Yushkov, speaking to Vestnik Kavkaza, noted that even if Iran manages to conceal certain production volumes from official statistics, in general, the IEA data are correct. "These data accurately show a tendency of reduce in the Iranian oil production due to sanctions. This is primarily due to the fact that Iran has fewer opportunities for oil exports," he recalled.
"As a result, oil becomes impossible to produce, since no one buys it. It’s not so important how much Iran actually extracts if its oil export tends to zero," Igor Yushkov pointed out.
The IEA data on Iran will definitely not allow oil prices to decline in the near future. "Investors believe that the less production in such countries as Iran, the greater the chance of an oil shortage, which means one needs to buy futures - an it makes oil more expensive. At the same time, you should understand that the decline in exports and output in Iran and even in Venezuela was already include in the current prices, therefore the prices will not jump up at once," the leading analyst of the National Energy Security Fund concluded.