Eurasia Group sees sharp increase in Iran exports if nuclear agreement reached

London (Quantum Commodity Intelligence) – Political risk consultancy Eurasia Group said Iran would aim to increase exports by 700,000 barrels per day within months of the US lifting sanctions, adding that a return to pre-sanction highs of 3.8 million bpd would likely take an additional six to nine months.

In a note to clients, Eurasia Group laid out a timetable for Iran ramping up production in the event of a breakthrough between Iran and the remaining parties to the nuclear deal, officially known as the Joint Comprehensive Plan of Action (JCPOA).   

"Once Iran returns to nuclear compliance — assumed to be two months after a return to the deal is agreed — it will try to export as much oil as it can as fast as it can. It will not be subject to OPEC+ quotas and will instead fight to regain its market share," said Henry Rome, senior analyst for global macro at Eurasia Group, in a Thursday note.

Eurasia's Rome detailed a scenario where Iran could hit its 3.8 million barrel-a-day capacity within 12 months of reaching a deal, although it noted that not all of that volume would be exported.

He estimated new exports would likely top out at around 2.2-2.4 million bpd. Total exports, including sales out of the country's significant volumes of floating storage, could run as high as 2.7 million bpd over the next 12 months, he said.

Iran is currently believed to be exporting up to 1 million bpd of crude, according to Quantum sources, with most of the shipments going to China.