Iran's crude oil production is expected to fall by approximately 500,000 bopd by year-end 2012 from 3.55 million bopd of production at the end of 2011, according the U.S. Energy Information Administration's (EIA's) Short-Term Energy Outlook released Tuesday.
Iran's oil output decline sped up during the last quarter of 2011, which EIA believes is due to lack of investment needed to offset offshore natural production declines.
"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," EIA said.
EIA's forecast does not factor in potential effects of the more recent sanctions targeting Iran's central bank and the impending European Union embargo on Iran's crude oil production. The agency said it is too early to assess Iran's ability to place its supply elsewhere.
EIA said it expects the forecast decline in production this year and additional 200,000 bopd in 2013 will be offset by increased production in other OPEC member countries. It also projects OPEC surplus production capacity will average 2.9 million bopd in 2012 and rise to 3.6 million bopd in 2013.
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