The Islamic republic has reportedly sold all of its condensate stocks.
Iran, whose determination to produce crude in record quantities is widely viewed as one of the biggest threats to the Organization of the Petroleum Exporting Countries (OPEC) bid to lower production and rebalance the market, is now reportedly struggling to maintain exports.
Sources told Reuters that the Islamic republic has sold all of its condensate stocks - said to be in the neighbourhood of 75 million barrels - from floating storage in the past two weeks, and that production constraints are causing it to struggle to keep exports growing.
Richard Mallinson, analyst for Energy Aspects, believes it is almost inevitable that exports will now decline: "We do think that (floating storage) has been the primary cause of the boost in exports; we see a very difficult path for Iran to raise crude output until it can get the Western expertise and investment back into the upstream, which has been notably slow to materialize."
Richard Mallinson, analyst, Energy Aspects
We see a very difficult path for Iran to raise crude output
Azernews is even more explicit in forecasting bad times ahead for Iran: reporter Dalga Khatinoglu writes that while the republic's oil and gas condensate export reached 3.05 million barrels per day (bpd) in the 12th month of the last Iranian fiscal year, the export volume for the current fiscal year is expected to be an average 2.4 million bpd: "This would be less than 2.5 million bpd of pre-sanctions level."
More bad news for Iran comes in the form of Indian Oil Corp and Mangalore Refinery and Petrochemicals Ltd, India's largest buyers of Iranian crude, which will cut import from Tehran to 4 million tonnes in 2017/18 from 5 million tonnes in the previous year, according to officials.
Bharat Petroleum Corp Ltd. (BPCL) and Hindustan Petroleum Corp Ltd. (HPCL) will also cut oil imports by 0.5 million tonnes each to 1.5 million tonnes; India's decision is due to delays in the award of a gas field to ONGC Videsh Ltd., despite New Delhi putting pressure on Tehran to make a deal.
Bijan Zangeneh, oil minister for Iran, said in response, "We cannot enter deals under threats; there are a lot of customers for Iranian oil and their demand surpasses our export capacity."
Presumably, these customers would not include Western companies: Reuters notes that the oil minister's efforts to secure deals with Western firms "has run into internal opposition.... the plans have now been postponed until after a May presidential election."
Another serious stumbling block for Iran is U.S. president Donald Trump, who has vowed to junk the deal that lifted sanctions against the Islamic republic; French oil company Total in February said a decision on a $2 billion gas project in Iran would be announced by the summer but hinges on a renewal of U.S. sanctions waivers.
Experts such as Fereidun Fesharaki, chairman of FGE, believe Iran can't sustain its recent high levels of output - and certainly not the 4 million barrels per day (bpd) level that Zangeneh wants to be the norm - because oilfield decline rates are about 400,000 bpd yearly: "Iran cannot produce much more than the present, so around 3.7 million bpd may be the max."