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"Iranian oil production, the backbone of the Islamic republic’s economy, fell by 12 percent in the first three months of the year and is likely to fall even more, industry experts say, as sanctions make it increasingly hard for the country to find markets for its crude. The decline, documented in a May report by the Organization of the Petroleum Exporting Countries, is sharply at odds with statistics provided by Iran’s Oil Ministry that register no significant change in output over the past year. But it is accelerating so fast that if current trends continue, Iran could lose its position as the second-largest crude oil producer in OPEC to Iraq by June 2013, the organization’s statistics show.
At a rate of more than 3 million barrels a day, Iran is still the second-largest producer of crude oil in OPEC after Saudi Arabia. But its production levels have been in gradual decline for years, hampered by sanctions that have starved the industry of spare parts and new investment. Its more immediate problem now is a lack of buyers, after new sanctions on financial institutions and pressures by the Obama administration on reliable customers like India, China and the Southeast Asian nations.
“We are not selling as much as before, and the use of outdated equipment is taking its toll,” said Reza Zandi, an oil specialist writing for Shargh, a newspaper that is critical of the government. “Clearly this is not serving Iran’s interest.” Iran’s oil minister, Rostam Ghasemi, on Tuesday denied both reports by OPEC and the International Energy Agency. “The reports are not true at all, and our oil is selling very well,” the semiofficial Fars news agency quoted him as saying.
Iran also faces a boycott of its oil by the European Union, which is scheduled to start on July 1. This will be accompanied by a ban on insurance for Iranian oil shipments, a measure that has already had an impact by deterring insurers from issuing policies that might extend beyond July 1.
“We are even seeing less and less Chinese and Indian companies calling our port,” said one an oil cargo inspector, who spoke on the condition of anonymity to avoid potential repercussions. He said his company’s final European customer arrived at the port for oil in the beginning of April. “We are waiting to see what will happen when those new sanctions kick in.” Already, financial sanctions devised by the United States Treasury Department are making it increasingly difficult for customers of Iranian oil to pay for the crude, with reportedly both China and India offering unfavorable barter deals calculated in local currencies.
“Our economy is like a car with four flat tires,” said Mohammad Reza Sabzalipour, the president of the Tehran World Trade Center. “We can’t bypass these sanctions forever. We need understanding and détente with the West.”
http://www.nytimes.com/2012/05/18/world/middleeast/iran-oil-production-drop-seen.html?_r=1&ref=world
At a rate of more than 3 million barrels a day, Iran is still the second-largest producer of crude oil in OPEC after Saudi Arabia. But its production levels have been in gradual decline for years, hampered by sanctions that have starved the industry of spare parts and new investment. Its more immediate problem now is a lack of buyers, after new sanctions on financial institutions and pressures by the Obama administration on reliable customers like India, China and the Southeast Asian nations.
“We are not selling as much as before, and the use of outdated equipment is taking its toll,” said Reza Zandi, an oil specialist writing for Shargh, a newspaper that is critical of the government. “Clearly this is not serving Iran’s interest.” Iran’s oil minister, Rostam Ghasemi, on Tuesday denied both reports by OPEC and the International Energy Agency. “The reports are not true at all, and our oil is selling very well,” the semiofficial Fars news agency quoted him as saying.
Iran also faces a boycott of its oil by the European Union, which is scheduled to start on July 1. This will be accompanied by a ban on insurance for Iranian oil shipments, a measure that has already had an impact by deterring insurers from issuing policies that might extend beyond July 1.
“We are even seeing less and less Chinese and Indian companies calling our port,” said one an oil cargo inspector, who spoke on the condition of anonymity to avoid potential repercussions. He said his company’s final European customer arrived at the port for oil in the beginning of April. “We are waiting to see what will happen when those new sanctions kick in.” Already, financial sanctions devised by the United States Treasury Department are making it increasingly difficult for customers of Iranian oil to pay for the crude, with reportedly both China and India offering unfavorable barter deals calculated in local currencies.
“Our economy is like a car with four flat tires,” said Mohammad Reza Sabzalipour, the president of the Tehran World Trade Center. “We can’t bypass these sanctions forever. We need understanding and détente with the West.”
http://www.nytimes.com/2012/05/18/world/middleeast/iran-oil-production-drop-seen.html?_r=1&ref=world
