Relative Increase in Volume and Price of Iran's Oil Exports in February

The Organization of the Petroleum Exporting Countries (OPEC) reported on Thursday, March 14, that the price of Iran's oil exports in February increased by more than 9% compared to January, reaching $61.39. The new OPEC report indicates that for the first time since May of last year, Iran's oil production increased by 12,000 barrels in February compared to January. Since the U.S. withdrawal from the JCPOA in May of last year until January of this year, Iran's oil production had been declining every month, dropping from over 3.8 million barrels to 2.743 million barrels in February. Recently, Reuters reported that total exports of oil and gas condensates from Iran to Asia in February are expected to reach 1.38 million barrels, while this figure was just over 710,000 barrels in January. The surge in Iran's oil exports is attributed to the revival of oil purchases from Iran by Japan and South Korea, which, due to a months-long halt in buying Iranian oil, imported more than expected from the Islamic Republic in February. According to Reuters statistics, tens of millions of barrels of unsold Iranian oil are stored in at least 13 large tankers and onshore storage facilities in Iran and China. Thus, the temporary surge in Iran's exports does not necessarily lead to a significant increase in the country's oil production, and Iran may supply part of the export growth from stored oil. The U.S. has granted exemptions to eight countries, including China, India, South Korea, Japan, Taiwan, Turkey, Italy, and Greece, to continue limited purchases of oil from Iran until May (next Persian month). It is still unclear under what conditions the U.S. intends to extend these exemptions, but recently, Reuters reported that the Trump administration plans to reduce Iran's oil exports by 20% starting in May, bringing the total below one million barrels per day. Before the U.S. withdrawal from the JCPOA, Iran exported 2.5 million barrels of oil and gas condensates daily. OPEC's monthly report states that the total oil production of the organization in February decreased by 221,000 barrels compared to January, mainly due to reduced production in Saudi Arabia and Venezuela. The U.S. sanctioned Venezuela in January, and the country's production decreased by 142,000 barrels last month, reaching about one million barrels. Venezuela's production has been continuously declining for years due to a lack of investment, down from about 2.7 million barrels in 2013. OPEC states that the demand for oil from the organization decreased by 1.4 million barrels in 2018 compared to the previous year and is expected to decrease by another million barrels this year. The demand for OPEC oil in 2019 is projected to be about 30.5 million barrels. In February, OPEC's production was 30.549 million barrels. Despite the decline in global demand for OPEC oil, production from non-OPEC countries is expected to increase by 2.24 million barrels this year, mainly due to growth in U.S. production.