Iranian oil output exceeds 3 million bpd

The US Energy Information Administration (EIA) in a report put Iran’s oil output at 3.2 million barrels per day (bpd) for February 2024.

According to the report OPEC’s total output during the month under review was up 170,000 bpd to 26.47 million bpd.

OPEC’s latest monthly report, however, has put Iran’s crude oil production at 3.148 in February, noting that the Islamic Republic maintained its place as OPEC’s third-biggest oil producer in the month.

According to the mentioned report, the price of Iran’s heavy crude increased by 20 cents in February to reach US$80.34 per barrel.

The director of the National Iranian Oil Company (NIOC) Explorations Department has said the country’s oil explorations registered a 300 percent growth in two years of the administration of President Ebrahim Raisi, who assumed office in August 2021.

Mehdi Fakour said the oil explorations have shown a considerable increase in various sectors as compared to the past five years, Mehr News Agency reported.

He added that the oil explorations made in the first two years of the current administration have registered a 300 percent hike.

The feasibility studies of some explorations have started in the country, he said, adding that negotiations have been made with a number of industrial production companies.

Currently, the oil exploration activities in the country are at a satisfactory level, Fakour added.

Earlier, the Head of the National Iranian Oil Company Mohsen Khojasteh Mehr said that the company has a 100-year vision for exploration, emphasizing that the company is determined to carry out maximum exploration operations to discover and maintain the country’s reserves.

Back in February, the International Monetary Fund in a report on Iran’s microeconomic indicators said the increase in Iran’s oil production in 2023 exceeded expectations.

The fund attributed the increase in its estimate of Iran's economic growth in the mentioned year to the higher-than-expected increase in the country’s oil production.

According to the new estimates of this international entity, Iran's economic growth in 2023 reached 5.4 percent, registering a significant increase compared to the previous year.

The International Monetary Fund had previously estimated that Iran's economic growth would reach only 3.0 percent in 2023.

Iran's crude oil exports grew by roughly 50 percent in 2023 to a five-year high of about 1.29 million bpd, with the vast majority going to China, according to Nikkei Asia.

The report, citing the International Energy Agency (IEA), put Iran’s oil production at 2.99 million bpd last year, 440,000 barrels more than in 2022.

As reported, IEA predicts a further rise of 160,000 barrels of Iran’s oil exports in 2024.

This increase is expected to contribute to a less tight market, alongside increases by the US and Brazil. The IEA sees global supply rising by 1.5 million bpd to an all-time high this year.

 

Iran oil income reported by EIA at US$54 billion for 2022

According to a report by the US Energy Information Administration (EIA), Iran’s oil revenues in 2022 were reported at US$54 billion, up $17 billion from the country’s oil income in 2021.

The EIA’s report also put the Islamic Republic’s oil revenue in the first five months of 2023 at US$19 billion.

Back in January, the EIA in a report put Iran’s average oil production in 2022 at 2.54 million barrels per day (bpd), 140,000 bpd more than the previous year.

In late April, the European Union's statistics office Eurostat announced the import of Iranian oil by three European Union (EU) members in 2022, and introduced Bulgaria as the newest customer for Iranian oil in this union.

The information published by Eurostat shows that the European Union imported 4,181 tons of crude oil or oil products from Iran last year.

Although the amount of EU oil imports from Iran is not a significant figure, it indicates the desire of European refineries to ignore the US sanctions against Iran, and the inclusion of these figures in the official European oil import statistics shows the desire of the European authorities to distance themselves from the sanctions, or at least showing their objection to the US sanctions policy against Iran.

Iranian President Ebrahim Raisi has said that the oil and gas sector experienced a growth of nine percent in the past Iranian calendar year 1401.

Oil Minister Javad Oji has also said that a new record high will be reached in the country’s oil export in the current Iranian calendar year.

The country’s oil export in 1401 was 83 million barrels more than that of year 1400 and 190 million barrels more than the export in year 1399, the minister announced.

Underlining that now oil export has reached the highest figure in the last two years, the official said, “Considering that the Oil Ministry is one of the main providers of the country's foreign currency; in the 13th government, despite the tightening of cruel sanctions, fortunately, thanks to the grace of God and the efforts of our colleagues in the country's oil and gas industries, there are good records in the field of exporting crude oil, gas condensate, and petroleum and petrochemical products.”

Despite the negative impacts of the U.S. sanctions, Iran has been ramping up its oil production and exports over the past few months.

In his remarks in November 2022, President Raisi highlighted the failure of the enemy’s policy of maximum pressure, saying the country’s oil export has reached the pre-sanction levels.

 

Weak demand persists for US natural gasoline

The natural gasoline market in the US Gulf coast could face headwinds in 2023 as faltering gasoline blending demand undercuts stable export demand, while record production provides ample supply.

One of the primary demand drivers for US natural gasoline is its use as a diluent for bitumen produced in the oil sands in Alberta, Canada. Diluents like natural gasoline are mixed into bitumen so it can more easily be transported on pipelines and railcars.

US natural gasoline exports to Canada totaled 204,000 barrels per day (bpd) in September, up by 4.6% from a year earlier, according to the latest available US Energy Information Administration (EIA) data.

During the first nine months of year 2022, exports averaged 176,555 bpd, down by 13% from the same time last year and down by 3.6% from the five-year average.

Bitumen production remained robust and reached 3.3 million bpd in September, up by 9.3% from last year, according to the Canada Energy Regulator (CER).

Bitumen production in the first nine months of this year totaled 3.12 million bpd, up by 2.3% from the same period last year.

Over the past decade, bitumen production has increased every year apart from the crude demand shock in 2020 that was caused by the onset of the Covid-19 pandemic.

Historical trends suggest bitumen production will continue to increase in 2023 and beyond, providing a stable, if not favorable, outlook for the US natural gasoline export market.

The other primary demand driver for natural gasoline is as a blending component for motor gasoline.

US refinery and blender net inputs of natural gasoline into gasoline blending pools averaged 212,000 bpd in September, up by 18% from a year earlier, according to the EIA.

US blending demand averaged 205,333 bpd through the first nine months the year, up by 41% from the same time last year.

Part of the increase in blending demand can be attributed to favorable margins for gasoline blenders. As a low-octane fuel, natural gasoline is one of many possible fuels that blenders can use in their blending pool. Lower natural gasoline prices relative to motor gasoline prices generally can incentivize blenders to incorporate more natural gasoline in their blending pools.

The premium of Nymex RBOB gasoline futures to natural gasoline prompt-month prices at Mont Belvieu, Texas, for example, averaged 154.17¢/USG from May 02 to August 30 this year, according to Argus data.

Refiners and blenders used on average 216,750 bpd in their blending pools during that time. During the same period last year, the differential averaged 66.89¢/USG and the amount of natural gasoline used in the blending pool averaged 139,000 bpd.

The premium started to narrow again in late-November 2022, a worrying sign for gasoline blending demand. The RBOB-natural gasoline spread narrowed from 105.31¢/USG on November 23 to 73.11¢/USG on December 09, 2022. Should this trend continue into 2023, it could provide downward pressure on natural gasoline prices.

In addition, record natural gasoline production will likely continue to pad inventories and provide ample supply. Natural gasoline production rose to a record 738,000 bpd in September, up by 12% from a year earlier.

Production this year through September was also a record at 662,777 bpd, up by nearly 11% from the same period last year.

Record production has helped to build inventories, which stood at 27.2 million barrels in September, up by 21%YoY.

Persistently elevated production heading into 2023 will likely provide additional downward pressure on prices as caverns will have ample supply to meet buying interest.