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Iran's Oil Exports Rapidly Decline As Other Producers Fill The Void

After 29% annual growth in 2017, net oil export revenues of OPEC members are expected to rise again by 30% to $736 billion in 2018, the US Energy Information Administration (EIA) estimated.

However, the figure will fall to $719 billion next year due to slightly lower OPEC production and exports, the report said on September 18. No major oil price increase is forecast, as Brent benchmark price is expected to increase by $1 to $74/barrel next year.

Iran gradually increased its oil exports in 2016 and 2017 after its nuclear deal with world powers was implemented in January 2016 and its oil (including gas condensate) export revenues increased by 45% year-on-year in 2017, higher than the OPEC’s average.

However, EIA’s short-term energy outlook report says Iran’s oil exports declined by 19% (about 0.5 million barrels per day) in August. Bloomberg tanker tracking data also indicates 30% decline since April and further shrinkage is expected for coming months as oil-related sanctions US sanctions are scheduled to be implemented soon.

Percentage of OPEC member output trend. 2010-1017
Percentage of OPEC member output trend. 2010-1017

US pulled out in May from Iran’s nuclear deal, called the Joint Comprehensive Plan of Action or JCPOA and resumed financial and industrial sanctions on the country in August and the additional oil-related sanctions would be imposed on November 4.

Last year, Iran exported a monthly average of 2.5 mb per day, including 2.1 mb/d of crude oil and 400,000 b/d of gas condensate.

The majority of OPEC’s overall revenue fall next year is due to Iran’s expected export plunge, while OPEC’s statistics show some other members, especially Iran’s Arab neighbors have been raising production and Libya is resuming the output rapidly.

Iran’s net crude oil and gas condensate export revenues (billion $):

OPEC oil revenue comparison chart. 2010-2017
OPEC oil revenue comparison chart. 2010-2017

Source: EIA

OPEC’s latest monthly report estimated a decline of 235,000 b/d in Iran’s oil production in August, compared to May. Venezuela’s production also declined by 153,000 b/d during the same period.

But the reduction in Iranian and Venezuelan production, the cartel’s total output increased by 437,000 barrels, as other members filled the void.

Saudi Arabia, Iraq, United Arab Emirates, Kuwait and Qatar have increased production by a total of 794,000 b/d during May-August, half of which came from Saudi Arabia.