State-controlled National Iranian Oil Co. has been priming oil fields -- and customer relationships -- so it can increase exports if an accord is clinched, officials said. Under the most optimistic estimates, the country could return to pre-sanctions production of almost 4 million barrels a day in as little as three months. It could also tap a flotilla’s worth of oil that’s hoarded away in storage.
But there are many hurdles to overcome. Any agreement must fully dismantle the gamut of U.S. barriers on trade, shipping and insurance involving Iranian entities. Even then buyers may still be reluctant, according to Mohammad Ali
Khatibi, a former official at NIOC.
“Our return may be a gradual process rather than swift and sudden -- it can’t happen overnight,” Khatibi, also Iran’s former OPEC envoy, said in an interview. That’s partly due to the coronavirus pandemic having “significantly hurt demand,” he said.
The pace of Iran’s comeback may prove critical for the oil market. While fuel consumption is on the rebound as governments distribute vaccines and major economies reopen, it remains depressed by lockdowns and new virus outbreaks. Extra Iranian supplies would impose a burden on other members of OPEC+, which has toiled for more than a year to clear a glut built up as the pandemic spread.
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