Crude oil production in the Middle East rebounded to between 14.6 million bpd and 15 million bpd earlier this month amid the ceasefire between Iran and the United States, the Financial Express reported today, citing a prediction that full recovery to pre-war levels would come by the end of the year.
The prediction comes from Rystad Energy, which said two days ago that it expected oil production to rebound to pre-war levels three months earlier than previously forecast thanks to the progress in peace negotiations. That was before reports emerged about new strikes between the United States and Iran. Still, the mood remains overwhelmingly optimistic, with the consultancy noting, however, that the crucial factor for oil production recovery to February levels remains the Strait of Hormuz and uninterrupted navigation in it.
Meanwhile, Rystad expects the volume of shut-in production to fall below 2 million barrels daily by the end of September. That would be quite a reduction from an estimated 9.6 million barrels daily in shut-in production right now. This, however, is down from 11.7 million barrels in suspended output three weeks ago.
“Two million barrels a day came back online in three weeks, and the recovery is spread across the region. Iran is moving fastest because its shut-in period was shorter and upstream damage was limited. Kuwait has already lifted all force majeure notices and is offering July cargoes by tender. Saudi Arabia is on track for a record 4.5 mbpd through Yanbu this month. The supply picture is clearly improving,” Rystad Energy MENA research director Aditya Saraswat said, as quoted by the Financial Express.
Iran’s crude oil output is seen rising substantially as well, from 2.4 million barrels daily right now to 3.1 million barrels daily by August and 3.3 million barrels daily by the end of the year if the United States extends the sanction waiver currently in force until August.
By Charles Kennedy for Oilprice.com
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