The interim agreement regarding Iran’s nuclear programme has raised hopes that the Islamic Republic will be able to raise crude production from its current level of 2.7 million barrels a day (b/d).

Tehran expects many of the sanctions currently in place will be lifted in 2014 and that normal service will resume, thus allowing crude production to edge back to 4 million b/d by the end of the year.

However, such a drastic rise in output has given rise to fears from its fellow Opec members that the increase could trigger a collapse in oil prices, which would have a serious impact on government revenues across the Middle East and beyond.

The situation is tricky and both Tehran as well as countries such as Saudi Arabia, which has profited greatly since the sanctions were introduced, have decent arguments to support their opposing standpoints.

Iran believes many of its fellow Opec members have been a little too ready to fill the gap in the market left by its drop in oil production. Saudi Arabia has recorded record revenues over the past two years, with output regularly hovering around the 10 million b/d mark.

Tehran feels it should be allowed to pump as much crude as it can in order to make up for its losses over the past 24 months. Riyadh believes it did the world a favour in upping its output to stop the oil price from spiralling out of control. Furthermore, the kingdom feels Iran’s troubles were self-inflicted due to its nuclear ambitions.

The disagreements have led to Opec coming under fire from within as well as from countries such as the US and Canada that are significantly raising their own respective production levels. 

However, for Tehran’s nuclear ambitions to fully recede, there is no doubt it needs to increase its hydrocarbons revenues and attract investment from foreign multinationals. There is a real chance that a major change can occur in 2014, a change that must not be hindered by Opec bickering and sabre rattling from any side.