Iran is determined to raise its oil output as planned as soon as sanctions on its oil industry are lifted, Iran’s OPEC representative Mehdi Asali said on Saturday.
The international sanctions were expected to be scrapped later on Saturday as part of a landmark deal between major powers and Iran to curb Tehran’s nuclear program.
Asali appeared to strike a defiant tone, contradicting earlier comments from other senior Iranian oil officials that the country would not flood the market at a time of global oversupply and an oil price crash. Iranian Oil Minister Bijan Zanganeh said this month that Iran would not seek to distort markets, but would make sure it regained its market share.
However, the state news agency IRNA quoted Asali as saying: “We have not moderated our plans regarding increasing output when sanctions are lifted. It will be increased by 500,000 barrels per day, and by another 500,000 barrels per day shortly after that.”
He said Iran had no intention of entering an oil price war with rival producers, but a full return of Iran to the international oil market could put it on a collision course with Saudi Arabia and other Gulf members, who have been resisting trying to shore up prices by cutting output.
The world is now producing 1.5 million barrels per day more than it is consuming, with Iran promising to add another 1 million barrels per day over the next 12 months.
Saudi Arabia was instrumental in getting OPEC in 2014 to maintain high production levels to defend its market share, rather than reducing supply to support prices.
At a meeting early last month, OPEC members failed for the first time in decades to agree on a production ceiling, but they are increasingly divided over the merits of the shift.
Gulf oil sources have expressed doubts that Iran can raise production as swiftly as it says it can, and have said it is not likely to increase production by more than 200,000 to 300,000 barrels per day by the end of this year.
Benchmark Brent blend fell below US$29 on Friday, closing below US$30 per barrel for the first time in 12 years.
“The immediate impact of the news that Iran is returning to the market will almost certainly be bearish for oil prices,” said Fawad Razaqzada, an oil analyst at Forex.com. “Given that this is mostly priced in however, we probably wouldn’t see a massive reaction. The full impact might be felt when the market knows how much oil Iran will actually produce and what the response from its competitors will be.”
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