JP Morgan revises up forecasts on Iran’s oil production

Analysts of the US JP Morgan bank have reviewed their assumption on Iranian capacity and lift output forecast to 3.9 million barrels per day (bpd) from 3.5 million bpd by the third quarter of 2016.

Since the start of the year, Iranian output has surged ahead of market consensus expectations with April output estimated at 3.5 million bpd, analysts said in a weekly Oil Market report, obtained by Trend.

“This surge in output has been achieved much more rapidly than we had forecast,” the analysts said. “Furthermore, current output is close to levels we forecast would be reached at the end of the year.”

Possibly, the steep increase in production may in part be a function of condensate volumes being blended into the crude streams,” they said.

Moreover, they said, increased gas production – following the start-up of several phases of the South Pars gas field – has increased the rate of gas injection into key oil producing assets, e.g. the Agha Jari field.

Analysts reffered the recent reports from the National Iranian Oil Company (NIOC) indicating that gas injection at this field has increased to around 50,000 barrels of oil equivalent per day.

The ability to sustain the rate of gas injection in domestic fields will be tested in the coming years, as Iranian domestic demand continues to grow and incremental gas supplies rely largely on completion of additional phases of the South Pars gas field, the analysts said.

Given updated capacity assessment, analysts said it is likely that Iranian production will make further gains in the coming weeks and months and that reported crude production could reach 4 million bpd, and this would represent the highest level of output since 2008.

According to the International Energy Agency’s latest report, Iran’s oil output and export stood at 3.56 million bpd and 2 million bpd in April respectively.

Before sanctions, Iran was exporting 2.2 million bpd of crude oil.

Source: Trend