Iran Complying With Crude Supply Cut Deal

EghtesadOnline: Iran cut back crude oil production last month in a move that reflects its adherence to a global supply cut deal and OPEC's efforts to shore up prices and restore balance to the beleaguered oil market.

News ID: ۷۴۱۴۸۲

13 May 2017

The country pumped 3,759 million barrels per day in April, trimming 39,000 barrels in daily crude oil production compared to the previous month, OPEC said in its monthly report on May 11, citing the secondary sources.

The Organization of Petroleum Exporting Countries announced a historic agreement last year to cut collective output by 1.2 million bpd through the first half of 2017. Iran was allowed to produce an average of 3.8 million barrels daily in the first six months of the year.

OPEC uses two sets of figures to monitor its output - figures provided by each country, and secondary sources which include industry media. The organization largely sticks to secondary sources data to gauge the members' adherence, Financial Tribune reported.

However Iran's own data show it is exceeding its output ceiling. The No. 3 OPEC producer cut production by 29,000 bpd to 3,862 million barrels in April, according to government figures.

OPEC's top exporter Saudi Arabia, which has over-complied with the cuts, ramped up production by 49,000 barrels a day to 9,954 million bpd in April. Second-largest producer Iraq produced 4.373 million bpd last month, down 39,100 bpd from March.

The UAE and Libya led the cuts by 62,300 bpd and 61,600 bpd respectively in April, but big increases from Angola, Nigeria and the kingdom largely offset the cuts.

OPEC's production decreased by a total of 18,000 bpd in April from the previous month to average 31.73 million bpd, according to secondary sources.

Tehran has sent mixed signals about its intentions in the oil market.

Oil Minister Bijan Namdar Zanganeh said in April that Iran's crude output was close to the 4-million-bpd mark, adding that it could add an additional 50,000 barrels to daily production later this year.

A few days later, the minister said Tehran will support a decision on extending the cuts for the second half of the year, adding that "Iran will stick to the level it has already accepted."

--- Iran Heavy

Iran's heavy crude oil averaged $51.12 per barrel last month, up 1.7% from the previous month.

Iran Heavy, one of the country's main oil export grades, has recorded an average of $51.57 per barrel in 2017, up almost 60% compared to the previous year in which global benchmark Brent plummeted to 12-year-lows.

OPEC's basket of 13 crudes ended the month slightly more than 2% higher on a monthly average basis. The basket price stood at $48.37 a barrel on Thursday, compared with $47.31 the previous day.

"Global markets continued to support the value of multiple-region destination grades, such as Arab Light, Basrah Light, Iran Heavy and Kuwait Export," OPEC said in the report.

Iran's oil production and export took a blow when the US and the European Union tightened the economic sanctions against Tehran to curb its nuclear program. But Tehran surprised global markets by boosting production at faster pace than most analysts had forecast after sanctions were lifted last year.