Within one year of sanctions being lifted from Iran, Iranian oil exports may reach 2.5 million barrels a day

18 august 2015 | "Kompaniya"

Iran and the six international mediators have resolved all disagreements. In response to token concessions by Tehran, the US and the EU are lifting economic sanctions from Iran. The oil embargo is also becoming a thing of the past. Despite obvious risks and the shock that this move will inevitably bring about in the energy market, Russia has supported the move.

Alexander Kurdin
Alexander Kurdin
Department for Fuel and Energy Sector

“Iran never completely stopped exporting oil while the sanctions were in place, it only reduced its exports,” the Head of the Analytical Center’s Department for Strategic Studies in Energy Alexander Kurdin commented in an interview for the 'Kompaniya' weekly. Prior to the embargo the country had been selling about 2.5-3 million barrels a day, after the embargo went into effect, Iranian exports fell to 1.5 million barrels a day. The expert noted that Tehran may resume full scale exports very quickly as it has got about 40-50 million barrels in storage. “Within one year after the lifting of the sanctions, Iranian oil exports may reach 2.5 million barrels a day,” Mr. Kurdin believes. 

The expert also noted that it is not in Russia’s interests to sour relations with Iran. The Islamic Republic of Iran is an influential player in the Caspian region and in the Middle East. There is no point in supporting the system of imposing economic sanctions as a means of exerting political influence either, it is something Russia’s currently suffering from herself. So friendship with Tehran is important for the Kremlin from a purely political standpoint and it is hardly going to translate into any financial benefits for Russia, the expert believes. Furthermore, eventually Iran may evolve into a serious competitor for Russia as it gets drawn more and more into the orbit of the economic interests of the EU and the US, Mr. Kurdin concluded.

In addition, the oil market is a global one and competition with Tehran is bound to be omnipresent. “Supplies from Russia and Iran are going to be competing in China. However, the rising demand in China can easily absorb oil from both countries. The two countries will also be competing in Japan, Korea and Southern Europe,” the expert said.