Enriching Iran: how the nuclear deal will affect the global oil market

Marcel Salikhov, President of the Institute for Energy and Finance, commented to the Izvestia newspaper on the consequences of the Iranian nuclear deal.

What is Iran capable of?

According to Marcel Salikhov, Iran currently produces about 2.5-2.6 million barrels of oil per day, official export volumes are about 0.4-0.5 million barrels.

- Taking into account the "gray" schemes and the export of petroleum products, most likely, the current export volumes are about 2 million barrels per day. In the period 2016-2018, Iran supplied the world market with about 3 million barrels per day. Thus, it can be assumed that the potential volumes that Iran can supply to the world market are 1.0-1.2 million barrels per day. However, such an increase will take time and take about a year, as it happened in 2015. The additional volume of production that Iran can increase within a few months, most likely, does not exceed 500 thousand barrels per day, he explained.

The additional volume of supply that Iran can put on the world market within 12 months is about 1% of world demand, Marcel Salikhov notes.

— This is a fairly significant value that can affect prices, but in principle cannot replace Russian supplies to the European market. We estimate that under "normal" conditions such additional supply would result in a $5-7/bbl price reduction over a 12-month horizon. Under the current conditions, the effect on prices will greatly depend on what happens to global demand and whether a recession occurs in the leading economies, as well as what happens to supply to the world market from Russia, he noted.