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The Financial Times –Iran’s oil output falls to a 20-year low
Iran’s oil production has fallen to its lowest level since the aftermath of the Iran-Iraq war 20 years ago as western sanctions threaten Tehran’s economic lifeline. Oil traders and western policy makers who monitor Iranian oi production estimate that Tehran pumped 3.2m barrels last month, the lowest amount since 1992. That is below the depressed level of 1999, when members of the Opec oil cartel implemented draconian production cuts to shore up oil prices, which had fallen below $10. “The full scale of the Iranian sanctions is yet to be fully appreciated by the market,” James Zhang, oil analyst at Standard Bank in London, said in a note to clients. Just five years ago, Iran produced 4.2m b/d. It pumped 3.7m b/d last year.Iranian oil production has fallen well beyond the initial expectations of Washington and Brussels as the latest round of sanctions over Tehran’s nuclear programme disrupts an industry already suffering from years of under-investment.The most recent European and US sanctions came into effect on July 1, triggering a scramble amid some refiners to find last- minute alternative suppliers. Russia, Iraq and Saudi Arabia have met most of the extra request for crude, traders said.The sharp drop in Iranian oil output comes amid heightened diplomatic tensions over Iran’s nuclear programme. Tehran and western powers failed to bridge their differences in high-level talks about the atomic programme over the past three months. The US and its European allies hoped that the oil sanctions would force Tehran to yield in the negotiations to avoid further economic damage.
Source:
Bianco Research
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July 11, 2012
