Roundup: Iran's oil production capacity recovers to pre-sanction levels amid global energy crisis: minister

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TEHRAN, June 11 (Xinhua) -- Despite U.S. sanctions and trade restrictions, Iran's oil exports have been on the rise over the past months amid the energy crisis following the Ukraine-Russia conflict.

Iran's Minister of Petroleum Javad Owji said recently that Iran's oil production capacity has reached pre-sanction levels of more than 3.8 million barrels per day (bpd) and pledged the increase in the sales.

Despite the tough oil and banking sanctions against Iran, both its oil sales and revenues have increased in the first two months of the current Iranian calendar year, or March 21-May 20, compared to the corresponding period last year, according to an IRAN daily report in early June.

The country's oil exports have surpassed 1 million bpd and the trend continues as new clients are swayed to Iran's exports market, said the report.

Meanwhile, in the two-month period, Iran's oil and petrochemical sales hit 7.5 billion U.S. dollars in value, which showed a 40-percent increase compared to the same period last year, said the Governor of the Central Bank of Iran Ali Salehabadi on May 31, according to Iran's Petro Energy Information Network affiliated with the Ministry of Petroleum.

Iranian officials have expounded on the recent developments in the energy market, and assured that conditions for selling oil have been facilitated due to the increasing global demand and the ways that Iranians have learned to defuse U.S. sanctions.

Energy market analysts also said that Iran's oil exports would possibly continue in the current year pursuant to certain variables.

Iran might be able to further increase its crude sales in the following months if the United States waives sanctions on Iranian oil flows to the global market, even without reaching a deal in the Vienna nuclear talks, Mike Muller, head of Asia at Vitol Group, said earlier in June.

"Uncle Sam might just allow a little bit more of that oil to flow," Muller said, adding "if the U.S. midterm elections are dominated by the need to get gas prices lower in America, turning a somewhat greater blind eye to the sanctioned barrels flowing out is probably something you might expect to see."

Besides, "a possible new nuclear deal would lead to an additional 500,000 to 1 million bpd coming into international markets, enough to weigh on prices," Paul Wallace, who leads Bloomberg's coverage of energy and commodity news in the Middle East and North Africa, wrote on June 5.

According to the writer, Iran has around 100 million barrels of oil in storage, which can be poured to the market to cool soaring prices.

Iran, a major crude producer in the Organization of the Petroleum Exporting Countries (OPEC), possesses 157 billion barrels of oil reserves, equivalent to 10 percent of world crude oil reserves and 13 percent of oil reserves of the OPEC, according to data from the Ministry of Petroleum.

However, the ebb and flow of Iran's oil exports over the past two decades has resulted in uncertainty around the sustainability of its supply to the market.

Iran's oil exports had fallen sharply under the western sanctions from 2012 to 2015. With the signing of the Joint Comprehensive Plan of Action (JCPOA) in 2015, Iran resumed an upward trend in oil production and exports in the following year.

Iran's crude exports averaged 2.48 million barrels bpd in 2016, culminating to 2.5 million bpd in 2017 out of the production level of 3.8 million barrels, according to the data from the Ministry of Petroleum.

In May 2018, former U.S. President Donald Trump pulled Washington out of the JCPOA and reimposed sanctions on Iran's energy and financial sectors, which resulted in a significant slump.

From mid-2018 to mid-2021, Iran's average output levels stood at 2.2 million bpd with exports levels down to 668,000 bpd, according to a study by the U.S. Energy Information Administration on July 2021.

In its Monthly Oil Market Report in February, the OPEC put Iran's average production in 2021 at slightly over 2.4 million bpd.

The downward trend stopped when Iran and world powers began talks in late 2021 that aimed to revive the JCPOA, and the country's oil production started to see a gradual rebound as more optimistic lights were shed upon the country's energy sector. Enditem

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