Iran's Oil Output at Lowest Level in 20 Years

WSJ.com—Iran's oil output has reached its lowest level in 20 years, independent data showed Wednesday, as the impact of sanctions dramatically deepens.

The output decline underscores how pressure on Iran is increasingly hurting the country's coffers—-with oil and gas normally accounting for more than half of its export revenue.

According to Vienna-based JBC Energy GmbH, Iran's crude output fell to 3.2 million barrels a day in April, down 150,000 barrels a day in two months. That level hadn't been hit since the aftermath of the Iran-Iraq war in 1990.

Iran's oil industry is targeted by a tightening web of sanctions over its nuclear program. The West suspects the program has military aims—which Iran denies.

The decline is "the result of the country's growing isolation due to its nuclear program," JBC said in a note.

For years, oil-field production in Iran has been hindered by sanctions that bar U.S. and European companies from investing there or supplying technologies to Tehran.

But since the beginning of the year, the measures have been compounded by sanctions directly targeting its oil sales. They include a planned European Union ban on imports of Iranian oil, which has led to a 14% decline in the country's crude exports in March as refiners anticipate the embargo.

But Tehran's oil sales are also coming under pressure in its core markets such as Japan or China. There, the U.S. has been lobbying governments to cut Iranian oil imports in exchange for an exemption on a ban to deal with Iran's central bank.

Data released Thursday by Japan's Ministry of Economy, Trade and Industry showed that the country imported 36% less oil from Iran in March 2012 from a year earlier.

China's customs service figures also show March imports of Iranian oil have fallen by more than half compared with last year.

State-owned National Iranian Oil Co. Wednesday denied any drop in exports to Japan and China and has always maintained its production is unaffected by sanctions.

India's two largest importers of crude oil from Iran will also cut Iranian oil imports by at least 15% at the request of the government, people with direct knowledge of the matter said Wednesday.

Though Iran's production was already hit by previous sanctions, the latest round targeting exports "is making things worse—reducing the amount of money Tehran itself has available to invest," said Trevor Houser, a partner at New York-based economic research firm Rhodium Group.