Iran is in the process of increasing its oil production in an effort to increase the country's GDP. At the moment, Iran is focusing on oil output production within the Foroozan oil field.
Saudi Arabia and Iran are currently sharing the Foroozan oil field. Iran is planning to increase the daily output to 12,000 barrels per day. To achieve this, the country is planning to add two more platforms in the said oil field very soon. This is according to the CEO of the oil company that's owned by Iran.
According to the latest agreements, Iran controls 11% of the entire Foroozan oil field. The oil reserves that are contained within Iran's 11% are estimated to be about 2.3 billion barrels.
Iran and Saudi Arabia share a lot of oil fields. Aside from Foroozan, the two countries also share oil fields in Dora, Lulu, and the Persian Gulf.
The additional platforms are part of Iran's program to increase the natural gas and crude oil production of the country as soon as possible. By doing so, Iran is also hoping to increase market share. At the moment, Iran's biggest competitor is Saudi Arabia. Yet, Iran is carefully controlling its crude oil exports. Specifically, they are making sure that they are liquidating old inventory.
Iran has a sizable inventory of crude oil due to recent economic sanctions. Although the economic sanctions have been lifted recently, they still have a good amount of crude oil barrels that need to be liquidated.
Iran is expected to export 1.66 million bpd of crude oil in May. However, Iran is planning to keep some of the oil by storing about 100,000 bpd in their tankers.
In April, country’s crude oil exports were around 1.8 million bpd. Additionally, Iran exported 370,000 bpd of condensate the same month. According to Reuters, Iran hit a six-year high in February when it exported 2.9 million bpd.
Meanwhile, Tehran has agreed to a production cut agreement that was proposed by the OPEC during the last months of the previous year. However, the proposed production cut made by OPEC called for an exemption. As long as the Iran’s oil production would not exceed 3.8 million barrels per day there would be no need to decrease production.
At the moment, Iran has an oil production capacity of 4 million barrels per day according to Rokneddin Javadi. Javadi is the deputy of Bijan Zanganeh, the Oil Minister. The country is planning to increase the oil production capacity by 5.7 million barrels per day with the help of foreign investors and oil companies. Iran's first contracts with foreign oil companies that are under the newly proposed and implemented International Petroleum Contract are planned to be signed during the last days of May.
Experts are saying that Iran's increased oil exports do not put immediate pressure on crude oil prices. When it comes to crude oil prices, there is a growing worry that prices may start to dramatically fall as the market is hit by surplus issues.