Iran’s crude oil production is expected to fall by about 500,000 barrels per day by the end of this year due to a lack of investment resulting from sanctions against the country, the U.S. Energy Information Administration (EIA) said Tuesday.
Iran’s oil production stood at 3.55 million barrels per day at the end of 2011, EIA said in its monthly report released Tuesday, noting that the country’s oil output decline began to accelerate during the last quarter of 2011.
“EIA believes that the acceleration reflects a lack of investment, which is needed to offset natural production declines,” EIA said.
A number of foreign companies that were investing in Iran’s upstream have halted their activities as a result of previous sanctions against Iran that have made it difficult to do business with the country, according to the EIA report.
The forecast does not factor in any potential effects of the recent sanctions targeting Iran’s central bank and the impending European Union embargo on Iran’s crude oil production, because “it is too early to assess Iran’s ability to place its supply elsewhere,” EIA said.
However, besides the forecast decline in Iran’s oil production this year, EIA expected that an additional decline of 200,000 barrels per day in 2013 will be offset by increased production in other OPEC members.
The agency predicted that OPEC surplus production capacity would average 2.9 million barrels per day in 2012 and rise to 3.6 million barrels per day in 2013.