Wall Street Journal – Iran’s crude production capacity is down almost 20% due to strict sanctions imposed by western governments on the nation, according to figures published by the International Energy Agency.
The IEA says in its March oil market report that Iran’s maximum sustainable crude production capacity is off by 700,000 barrels a day since December 2011, to a current 3 million barrels a day. Western nations agreed on tough sanctions on Iran’s oil industry at the start of 2012.
Analysts attribute the falling capacity to a ripple effect beginning with the dwindling demand for Iranian crude. Fewer buyers mean it is likely the Islamic Republic has shut in some production. This can reduce the pressure pushing oil and gas out of the fields, making it difficult to return to previous levels of output when production is restarted, analysts added.
“If both gas and oil supply are being shut in, there may well be issues in terms of sustainable production capacity,” said David Fyfe, head of market research and analysis at Gunvor, a role he previously held at the IEA.
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