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Sanctions-hit Iran oil to take 'years' to return to market: FGE's Fesharaki

Highlights

A landmark interim deal last November between the Western powers and Iran over the latter's nuclear program could see about 200,000-300,000 b/d of additional oil released into the markets by mid-year, but any further increments are likely to take years, according to US-based consultancy FACTS Global Energy's chairman Fereidun Fesharaki.

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The November deal between Iran and the so-called P5+1 -- Britain, China, France, Russia, the US and Germany -- took effect on January 20 and holds for six months. The agreement, which has eased some of the crippling economic sanctions against Iran for a period of six months, could see Iranian crude supplies going up by around 200,000-300,000 b/d by July, Fesharaki told the 32nd JCCP International Symposium in Tokyo Wednesday.

But a full return of the estimated 1.2 million b/d of Iranian crude locked out of the markets as a result of several rounds of US and European Union sanctions against the Islamic regime is unlikely any time soon, because the FGE expects negotiations over a comprehensive, long-term deal to take "several years," Fesharaki said.

Meanwhile, the approximately 1.2 million b/d of Libyan crude currently out of the market because of protests and strikes in the North African country is more likely to return by the end of the year, which is expected to be balanced by Saudi Arabia curtailing its output to prevent a price slide, Fesharaki said.


For 2014, Brent is likely to average $100-105/barrel, he said.

But starting around 2016, the FGE head predicts "an inevitable decline" in the price of oil over the longer term, thanks to supply outstripping demand: "80 dollars a barrel is a respectable floor for Brent," Fesharaki said, noting that the level would support production ranging from tight oil in the US to the Brazilian sub-salt plays.

--Vandana Hari, vandana@platts.com
--Edited by Geetha Narayanasamy, geetha.narayanasamy@platts.com