Iran Set to Pump More Oil Into Market Glut – by Clifford Krauss and Stanley Reed (New York Times – January 18, 2016)

http://www.nytimes.com/

HOUSTON — With international sanctions lifted, the Iranian government called on its oil industry Monday to open the taps on production, a move that could add to a global glut of crude that has sent prices into a tailspin.

Benchmark prices edged further below $30 a barrel as traders considered the prospect of new oil flowing into a global market already oversupplied by one million barrels a day, roughly enough to fuel the needs of every driver in a state the size of Pennsylvania or Ohio.

Iranian news organizations quoted Rokneddin Javadi, the deputy oil minister, as saying Iran was ready to add 500,000 barrels a day to its output. But some oil analysts doubt the Iranians can deliver all the production they promise.

Iranian production is roughly 2.9 million barrels a day, with much of that sold to customers in Asia given quota allowances to continue imports while sanctions over Iran’s nuclear program cut off other outlets. Those sanctions were removed over the weekend as Iran rushed to comply with the agreement.

An additional half a million barrels has been considered the most Iran is capable of producing from oil fields that are aging and in desperate need of investment. But the country has vast amounts stored on shore and in sea tankers, which could increase exports for the next few months at least.

Iranian officials promised to increase production even further, to an additional million barrels a day by the end of the year.

“There is some concern the Iranians can pull a rabbit out of the hat and pull out bigger volumes,” said Helima Croft, global head of commodity strategy at RBC Capital Markets, a division of Royal Bank of Canada. “It’s not coming at a great time for these barrels to be hitting.”

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