Iran has a glut of unused oil as it cuts production amid the COVID-19 pandemic and US sanctions.
Crude oil production was at its lowest level in 40 years in June and storage facilities and vessels are nearly full in Iran, Reuters reported today.
Iran had 63 million barrels of onshore oil in June. There was a surge in April at the height of the pandemic. The level of onshore reserves was only 15 million barrels in January. The June figure constitutes around 85% of Iran’s storage capabilities, according to Reuters.
Production was as low as 1.9 million barrels per day in June, the lowest level since 1981 after the start of the 1980-88 Iran-Iraq war, Reuters reported. In comparison, Iran produced more than 3.5 million barrels per day in 2018, according to OPEC data. By September 2019, production was less than 2.5 million barrels per day, according to data obtained by the BBC.
Exports have been hit as well. Reuters reported that Iran’s oil exports in May were between 100,000 and 210,000 barrels per day. In 2018, Iran exported more than 1.8 million barrels per day, according to OPEC data. And in 2019, exports were already below 500,000 barrels per day, according to the BBC.
Iran is a major oil exporter and member of OPEC. However, demand for oil is down across the world in large part due to the coronavirus. Iran itself has been hit hard by the virus, and surpassed 10,000 deaths last month.
The Islamic Republic’s oil industry is being further harmed by harsh US sanctions on the country that deter the purchase of Iranian oil. The United States has placed a variety of sanctions on Iran’s energy sector, including on the captains of Iranian vessels.
The United States reimposed sanctions on Iran in 2018 after the Trump administration withdrew from the Iran nuclear deal. There has been a major drop in Iran’s oil production and exports since then, the data from the BBC shows.
Tehran has sought to skirt the sanctions. Several Iranian tankers have completed fuel deliveries to Venezuela this year. The South American country also is sanctioned by the United States. In June, both Iranian and Venezuelan state media reported that Iran would send regular fuel deliveries there.