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Iran saw its exports drop to one million barrels a day after the impositions of widespread sanctions in 2012, from a peak of 2.3 million barrels a day.RAHEB HOMAVANDI/Reuters

Iran is ready to battle its rivals both within and outside OPEC for a larger share of the oversupplied global oil market as sanctions against it are lifted and the prospect of its added production keeps downward pressure on already-depressed prices.

In a statement on the Iranian Oil Ministry website, Roknoddin Javadi, deputy oil minister, said Tehran is determined to retake the country's share of export markets, which collapsed after the international sanctions were imposed in 2012. Many of those restrictions are being lifted in the wake of a determination by the International Atomic Energy Agency that Iran has met its commitments under last summer's agreement aimed at limiting its capacity to build nuclear weapons.

His comments came as the Organization of Petroleum Exporting Countries (OPEC) released its monthly outlook that forecast the 13-member cartel will continue to boost production in the coming year, while non-OPEC output will drop, with the biggest decline coming in the United States. Indeed, the American government says crude imports have begun to climb there and will grow faster as U.S. production falls and demand grows.

Already at 13-year lows, crude prices retreated further Monday on international markets, while trading on the New York Mercantile Exchange was suspended for the Martin Luther King Jr. holiday. Brent crude fell to $27.67 (U.S.) a barrel early on Monday, its lowest since 2003, before recovering to $28.64. U.S. crude was down 48 cents at $28.94 a barrel.

With the world's fourth-largest reserve base – and second only to Saudi Arabia among low-cost Middle East producers – Iran saw its exports drop to one million barrels a day after the impositions of widespread sanctions in 2012, from a peak of 2.3 million barrels a day. Tehran says it expects to increase production by 500,000 barrels a day this year and another 500,000 thereafter. Most of that higher output will be exported, at least until the country's economy, which suffered under sanctions, revs up.

But analysts say that ambition will prove difficult to meet.

Iranian production is likely to grow by 250,000 to 400,000 barrels a day this year, said Amrita Sen, of U.K.-based Energy Aspects. "But [the country] will then face technical constraints that require western expertise and investment," she added in an e-mail.

While other analysts have blamed the recent bout of price weakness on the prospect for higher Iranian production, Ms. Sen said the lifting of sanctions has been long expected and should be "priced in," though she said there appears to be some "knee-jerk reaction" in the market.

However, the United Arab Emirates Energy Minister said in Abu Dhabi on Monday that any extra supply of crude oil would "harm the market." Suhail bin Mohammed al-Mazroui said any new production that comes into the market would delay the time for the market to balance itself. "Does Iran have the right to do so? Yes of course; they are a member of OPEC and are entitled to that … but is this going to help [the] situation? No," he said.

In its monthly market report released Monday, OPEC said the global demand should grow by 1.25 million barrels a day this year, while non-OPEC production will fall by 660,000. That should lead to a "rebalancing" of the market by late 2016, it added, though it did not take into account the prospect of rising Iranian output. Russia also boosted production to a record 10.8 million barrels a day last year, and is expected nearly meet that in 2016.

The U.S. shale oil producers will be the big losers this year, with production off by an average 380,000 barrels a day in 2016, compared with last year and capital expenditures down a further 18 per cent after falling 40 per cent in 2015. Meanwhile, U.S. demand is expected to grow by 250,000 barrels a day.

As a result, imports are growing there, despite the saturated market and bulging storage tanks. Foreign oil supplied 66 per cent of the U.S. market in 2006, a figure that fell to 42.4 per cent with the booming unconventional production. But the Energy Information Agency said imports will supply 44.6 per cent of the U.S. market this year, rising to 46.8 per cent in 2017.

Long-standing American sanctions bar Iranian oil imports to the United States, but other producers, including the Saudis, are targeting that growing market.

With a report from Reuters

Follow Shawn McCarthy on Twitter: @smccarthy55Opens in a new window

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