Hamid Mollazadeh
OPEC’s monthly reports remain one of the most trusted reference points in the global oil market, offering not only a snapshot of supply and demand but also a strategic lens for producers navigating volatile conditions.
For Iran, the latest OPEC report—released in January 2026 and covering December 2025—highlights a striking contradiction: a rare and significant rise in oil production over the past year, paired with declining prices that limit the fiscal upside of higher output.
According to the report, Iran’s crude oil production slipped marginally in December 2025, falling by 1,000 barrels per day to 3.187 million bpd. In isolation, the decline is negligible. Yet within the broader context of Iran’s oil sector—shaped by sanctions, constrained export channels and reliance on Asian demand, particularly China—even small shifts carry meaning.
The more consequential figure lies in the annual average.
Iran’s oil production in 2025 averaged 3.261 million bpd, a sharp increase from 2.257 million bpd in 2024, marking one of the most notable year-on-year production jumps in recent years.
Tactical Growth
This surge, however, has not been driven by major new investments or large-scale field development. Rather, it reflects Iran’s ability to maximize existing capacity, adapt export strategies and take advantage of relatively improved market access in Asia. In this sense, Iran’s production growth has been tactical rather than structural. The slight dip in December may therefore point to year-end demand adjustments or a more cautious supply stance amid softening market conditions.
While output trends appear encouraging, pricing tells a more restrained story. OPEC data show that the price of Iranian heavy crude fell by $2.41 per barrel last December, from $64.25 in November to $61.84.
This decline mirrors the broader downturn in global oil prices and the OPEC basket, underscoring Iran’s vulnerability to market-wide pressures. Over the full year, Iranian heavy crude averaged $69.50 per barrel in 2025—hardly a weak figure by historical standards, but still below the optimistic assumptions embedded in Iran’s budget planning.
Accessible Revenue
More importantly, nominal prices do not translate directly into accessible revenue for Tehran. Generous discounts offered to Chinese mini refiners, higher shipping and insurance costs and financial transaction restrictions mean that a portion of this price remains out of reach. As a result, even with higher export volumes, Iran’s net oil income remains constrained.
At the OPEC level, total production among the organization’s 12 members rose modestly in December to 28.5 million bpd, led by Saudi Arabia and Iraq, which continue to dominate supply decisions. Iran’s position within OPEC remains unique: while production has increased, its ability to influence collective output policy is limited compared to the group’s leading producers.
Among OPEC plus countries, crude production declined by 344,000 bpd in December, pulling total OPEC plus output down to 42.8 million bpd.
In theory, such cuts should have supported prices, but broader concerns—ranging from global economic uncertainty to tight monetary policy in major economies—kept downward pressure intact. This was reflected in the OPEC basket price, which fell to $61.74 per barrel in December, reinforcing revenue pressures for Iran.
Looking ahead, OPEC’s demand outlook offers a cautiously optimistic signal. The organization expects global oil demand to reach 106.5 million bpd in 2026 and 107.8 million bpd in 2027, with growth driven mainly by emerging economies and sustained fuel consumption in transport. For Iran, rising demand could expand opportunities in Asian markets, provided political and logistical constraints do not tighten further.
Ultimately, the latest OPEC data suggest that Iran’s oil sector is operating in a narrow corridor between opportunity and limitation. The experience of 2025 shows that higher production alone is not enough to secure stable revenues.
In a fragile and highly competitive market, Iran’s long-term oil strategy will depend not just on barrels pumped, but on pricing power, market access and the effective use of energy diplomacy in an increasingly complex global energy landscape.
