On Wednesday, Iran’s new President Raisi nominated Javad Owji as the new Oil Minister. Iran is struggling with U.S. sanctions, which have hampered most of its crude oil sales in recent years.
Lacey is a hardliner who faced sanctions from the West, which accused him of human rights abuses, when he was a judge.
Owji is the former deputy minister of oil in Iran. Before being promoted to a full minister, he still needs a vote of confidence from the parliament. Notably, Owji also held several management positions at Iranian energy companies, particularly in the natural gas sector. For example, he is the managing director of the National Iranian Gas Company and the head of the Iranian Gas Development Engineering Company.
Iran’s former Oil Minister Zanganeh said in July this year that the new Oil Minister’s main task is to increase oil exports hit by sanctions. Zanganeh has played a central role in Iran’s economy for 16 of the past 24 years.
The United States and Iran began the sixth round of indirect talks in mid-June to discuss the restoration of the 2015 nuclear agreement. The deal was reached by the United States, three European powers, China and Russia, along with Iran. But in 2018, former US President Trump announced his withdrawal from the nuclear agreement.
Subsequently, Trump reimposed sanctions on Iran’s energy sector, causing refineries in many countries to avoid Iranian crude oil, forcing Iran’s oil production to be well below its capacity. You know, Iran has the fourth largest oil reserves in the world and relies heavily on oil revenue.
According to EIA statistics, as of the end of 2020, Iran’s oil reserves accounted for 25% of the Middle East’s oil reserves and 12% of the global oil reserves. Moreover, although Iran is an OPEC member, its crude oil production is still limited by U.S. sanctions under the OPEC+ agreement and is therefore not subject to production cuts.
However, Iran’s crude oil exports and production have declined since the United States reinstated sanctions on Iran’s oil exports in May 2018.
In the first few months of 2019, the U.S. government granted sanctions exemptions to some of Iran’s major oil importers, so Iran’s daily crude oil production stabilized at around 2.6 million barrels. But after those exemptions expired in May 2019, production fell to about 2.1 million barrels per day.
According to data updated by the EIA in July, Iran’s crude oil production was less than 2 million barrels per day in 2020, which is Iran’s lowest production level in the past 40 years.
EIA expects Iran’s crude oil and condensate exports to fall from more than 2.5 million barrels per day in 2017, the year before the United States reimposed sanctions. The average in 2020 was less than 400,000 barrels per day.
Iranian Oil Ministry officials said that if US President Biden and the Iranian government reach an agreement to lift sanctions, Iran It plans to increase daily production from the current 2.1 million barrels to 3.8 million barrels.
However, the current US-Iran negotiations are at a deadlock, and the new oil minister will shoulder a lot of pressure after taking office. Lacey supports talks on lifting sanctions and has nominated hawkish diplomat Hossein Amirabdollahian as foreign minister, a sign that the Iranian president intends to take a hard line in negotiations.
Nasseri, managing director of the Middle East region of consulting firm FGE, said: “Owji will face severe challenges in defending Iran’s position and protecting Iran from calls for production cuts. . Because many experienced Iranians in OPEC are no longer within the organization, and Owji himself does not have a deep relationship with OPEC.”
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