Iran gears up for return to oil market

Iran is preparing to ramp up global oil sales as talks to lift U.S. sanctions show signs of progress. But even if a deal is struck, the flow of additional crude into the market may be gradual.

State-controlled National Iranian Oil Co. has been priming oil fields so it can increase exports if an accord is clinched, officials said. Under the most optimistic estimates, the country could return to pre-sanctions production of almost 4 million barrels a day in as little as three months. It could also tap a flotilla’s worth of oil that’s hoarded away in storage, Bloomberg reported.

But there are many hurdles to overcome. Any agreement must fully dismantle the gamut of U.S. barriers on trade, shipping and insurance involving Iranian entities. Even then buyers may still be reluctant, according to Mohammad Ali Khatibi, a former official at NIOC.

"Our return may be a gradual process rather than swift and sudden - it can’t happen overnight," Khatibi, also Iran’s former OPEC envoy, said in an interview. That’s partly due to the coronavirus pandemic having "significantly hurt demand," he said.