Iran’s oil minister Bijan Namdar Zanganeh recently stated that Iran wants to pump almost 4 million b/d within seven months after sanctions are lifted and 4.7 million b/d as soon as possible after that. 

Zanganeh also stated that “such an increase may cause oil prices to fall, but that does not mean we won’t enter our oil into the market”. Other highly interesting statements from Zanganeh are the following: “Countries that sold more oil and took market share from sanctions-bound Iran will have to adjust as the country restores its output and exports to historical levels. Those who are responsible for protecting prices are those who have filled our share before and used it. Our only responsibility here is attaining our lost share of the market, not protecting prices.” 

We think that sanctions will be lifted by yearend and that Iran should be able to reach back to about 3.5 million b/d by 1H-2016 from the current level of 2.8 million b/d in output. These extra barrels should be going to exports, which should hence increase exports from today’s 1.3 million b/d to about 2 million b/d by next summer. In order to take the next step and reach back to 4 million b/d in production and 2.5 million b/d in exports we believe it will be necessary to invest heavily in the Iranian oil industry. Those investments will most likely be coming in our view.

Eoin Treacy's view

Here is a link to the full report. 

There has been a great deal of debate on the merits of the deal to remove sanctions on Iran in exchange for access to its nuclear program. However the most likely scenario is that the deal will be ratified and that Iran will ramp up oil exports. That policy will achieve a number of goals, not least recapture lost market share, discomfit its regional competitors and improve the country’s balance sheet. 

Brent crude has paused in the region of $50 over the last week but a clear upward dynamic will be required to check the short-term decline and signal support in the region of the January low.