15 JUNE 2016, 13:43 (GMT+04:00)
By Fatma Babayeva
Iran seems committed to push forward with plans to pump additional barrels of oil into an already oversupplied market.
The country’s crude output has crossed over 3.8 million barrels a day during the current month, which marks about 40 percent increase since the western sanctions were lifted.
Iran’s Petroleum Minister Bijan Zangeneh announced about this during the public meeting of the Iranian Parliament on June 13, Shana news agency reported. Zangeneh noted that Iran has doubled oil exports, which reached 2 million barrels per day now.
The Minister stressed the need for foreign investment to develop the country’s oil and gas industry as well.
Iran plans to push its oil exports up to 2.2 million barrels a day by the end of this summer. In late May, the oil production in Iran amounted to 3.562 million barrels per day, which was 90,000 barrels more compared to the volume extracted in April, according to OPEC’s June report released this week.
Obviously, greater supply will pressure global oil pricing. However, the issue for Iran is market share. The country is determined to regain the market share lost as a result of the sanctions, James M. Dorsey, Senior fellow at Nanyang Technological University's S. Rajaratnam School of International Studies told AzerNews via email while commenting on Iran’s increasing oil exports to the global market.
Geopolitical tensions between Iran and Saudi Arabia led to failure of OPEC’s Doha and Vienna meetings previously. The organization could not realize its oil freezing plan or put production ceiling to control volumes of oil that the member states pump. Saudis refused to take any measure without the commitment by the Iranian side.
Dorsey believes the more Iran reintegrates in the international community, as well as, the economy and financial systems, the easier investment will become.
Although most of the western sanctions against Iran were removed, some of the U.S sanctions still remain in place. It bans conducting business transactions in U.S. dollar with Iran, which obstructs flow of the investment to the country.
Dorsey believes that nothing much is likely to happen on this front until after the U.S. elections, and then it will depend on who has won the election.
Currently, Iran’s oil industry attracts attention of the foreign investors more than its gas sector do. Nevertheless, the Islamic Republic is very keen to boost its gas exports too.
Dorsey said that increase in the gas export volumes of Iran is only a matter of time.
The Iranian gas industry is encountering the same problems in attracting foreign investment that most sectors of the economy face. Foreign investors are circling Iran but hesitant to bite as long as they feel that there is a risk of violating American sanctions, added the expert
Iran is currently building a pipeline to Oman, where it will use the LNG plants to exports its natural gas supplies.
Touching upon Iran’s preference to construct Iran-Oman pipeline over other options, Dorsey underlined that Iran has very close relations with Oman that has been very helpful to Iran as a mediator with the United States and in terms of maintaining economic and political relations.
Fatma Babayeva is AzerNews’ staff journalist, follow her on Twitter: @Fatma_Babayeva