Iran's total crude oil and condensate sales likely reached around 2.8 million barrels per day (MMbbl/d) in September, two sources with knowledge of the matter said, nearly matching a 2011 peak in shipments before sanctions were imposed on the OPEC producer.
The run-up from shipments of around 2.5 MMbbl/d in August comes mainly from condensate, a light oil excluded from OPEC supply quotas that is often produced with natural gas and can be used to make naphtha for petrochemical production.
Iran sold 600,000 bbl/d of condensate for September—up from about 350,000 bbl/d in August and including about 100,000 bbl/d shipped from storage—to meet robust demand in Asia, the two sources said. September crude exports increased slightly from the previous month to about 2.2 MMbbl/d, they said.
Iran, along with Libya and Nigeria, is allowed to produce "at maximum levels that make sense" as part of any output limits in a surprise deal reached last week by OPEC.
Still, the Middle Eastern producer has surprised the market by ramping up its oil output faster than expected, to 3.63 MMbbl/d in August, according to OPEC, up a quarter from end-2015 since sanctions were lifted in January.
"Iran cannot produce much more than the present, so around 3.7 MMbbl/d may be the max," said Fereidun Fesharaki, chairman of consultancy FGE.
Even if Iran's output hit 3.8 MMbbl/d—as an oil official said it had in September—it would not be able to sustain that volume as decline rates at its oilfields are about 400,000 bbl/d each year, Fesharaki said.
National Iranian Oil Co. (NIOC) officials did not immediately respond to an emailed request for comment.
Iran has said it plans to raise its output to 4 MMbbl/d, although other analysts agreed production has probably peaked for now because investments to pump out more oil are lagging.
South Pars Condensate To Push Growth
Condensate instead of crude oil will drive Iran's export growth for the remainder of 2016, the sources said, thanks in part to developments at its giant South Pars gas field that have increased the supply of the light oil from there.
NIOC also drew in September on condensate stocks held in floating storage and onshore tanks to help meet growth in demand from China, South Korea, Japan and India, as the Iranian condensate became more competitive against the tightening supplies of a rival grade from Qatar.
Iranian ports loaded 2.153 MMbbl of crude and 486,000 bbl/d of condensate in September, according to Thomson Reuters Supply Chain and Commodities Research. That put the month's total at 2.639 MMbbl/d—excluding the condensate loaded out of storage—up from 2.472 million bpd in August, the Reuters data showed.
Condensate sales could reach 800,000 bbl/d in October, in excess of production at about 550,000 bbl/d, one of the sources said, suggesting further draws from floating tankers.
"Korea was the main demand driver for the growth. Japanese and Indian plants were also raising imports," said one of the two sources with knowledge of the matter from Beijing, adding that China's Sinopec has also boosted its offtake of condensate since August.
Iran will sell another 2 MMbbl, or about 66,000 bbl/d, of South Pars condensate each month to Hyundai Chemical in Daesan between October and December, the two sources said.
Iranian condensate will meet about 70% of the feedstock demand at a new Hyundai Chemical splitter jointly operated by Hyundai Oilbank Co. and Lotte Chemical Corp.
A Hyundai Oilbank spokesman declined to comment.
According to trade flow data on the Thomson Reuters Eikon terminal for Iran condensate that discharged in September, about one-third went to South Korea, with the rest going to the United Arab Emirates, India, China and Japan.
Iran's South Pars condensate is usually sold at small premiums to Dubai quotes, free-on-board, much lower than Qatari condensate, which sells at premiums of $2/bbl to $3/bbl, trade sources said.