OPEC Reports Slight Rise in Iran's Dec. Oil Output

EghtesadOnline: Iran slightly boosted its crude production last month ahead of a supply-cut deal that came into force on Jan. 1, OPEC said in its monthly report this week.

News ID: ۷۳۹۳۲۹

21 January 2017

The No. 3 OPEC producer on average pumped 3.720 million barrels per day in Dec., 9,500 barrels a day higher than its output in the previous month, OPEC said, citing secondary sources. Tehran did not report its oil production figures for December.

OPEC uses two sets of figures to monitor its output - figures provided by each country, and secondary sources which include industry media. This is a legacy of old disputes over how much countries were really pumping.

The report indicated a steady rise in Iran's crude oil production over the past two years, according to Financial Tribune.

From an average of 2.83 million bpd in 2015, output soared to 3.53 million bpd in the following year thanks to the lifting of international trade and financial restrictions against Iran last year that allowed the country to diversify its market and sell significantly higher amounts of crude.

According to secondary sources, OPEC's Dec. output decreased by 221,000 bpd from the previous month to 33.08 million bpd. Output increased the most in Iraq, Angola and Libya, while production in Saudi Arabia, Nigeria and Venezuela showed the largest decline.

Saudi Arabia, the 13-nation group's top producer and exporter, slashed supplies by 150,000 bpd to 10,474 million bpd last month, making a promising impression that it is ready to implement the planned OPEC cuts.

OPEC agreed in Vienna on Nov. 30 to reduce crude production to 32.5 million bpd, around 1.2 million barrels per day lower than its October output level. The deal, which is to last for six months, came into force in January. Non-OPEC producers also promised to scale back production by 558,000 barrels per day.

Under the deal, Iran was allowed to raise output from 3.7 million bpd in October to 3.8 million bpd through the first half of 2017, while Nigeria and Libya were granted exemptions because they have experienced significant supply outages due to internal conflicts.

Preliminary data indicates that global oil supply decreased by 0.30 million bpd in December to average 96.92 million bpd, OPEC estimated based on preliminary data.

The price of Iran Heavy, the country's main oil grade for export, jumped 21.2% in monthly trade, settling at an average of $51.41 per barrel in Dec. from $42.42 in the previous month, the secondary sources said.

However Iran's crude oil settled at a yearly average of $39.57 per barrel in 2016, down more than 18% from the $48.80 in 2015, weighed down by persistently low prices that prevailed in much of the last year.

In 2016, oil futures witnessed one of the worst slump cycles since the financial crisis in 2008, resulting in their worst yearly average in 12 years, the report noted.

The price of Brent, the international crude benchmark, has nearly doubled since it collapsed to a multiyear low of $27 a barrel in February. The price of OPEC basket of thirteen crudes stood at $51.45 a barrel on Thursday.