The International Energy Agency (IEA) estimates that Iran can increase its oil production by 300,000 barrels a day (b/d) by the end of the first quarter now that nuclear-related sanctions have been lifted.

The forecast is less optimistic than that of the Iranian government, which has insisted it can boost output by 500,000 b/d immediately after sanctions relief.

Additional supplies from Iran are expected to add further to the global oversupply that has resulted in a collapse in crude prices.

In its January oil market report the IEA said that global oil supplies expanded by 2.6 million b/d in 2015 after a gain of 2.4 million b/d in 2014.

“By last December, however, growth had eased to 0.6 million b/d, with lower non-OPEC production that pegged below year-earlier levels for the first time since September 2012,” said the Paris-based organisation.

The IEA estimated that global inventories rose by about 1 billion barrels in 2014-15 with a further build-up of 285 million barrels this year.

“Despite significant capacity expansions in 2016, this stock build will put storage infrastructure under pressure and could see floating storage become profitable,” the IEA said.