Iran's oil production has reached 3.4 million barrels per day, according to the country's oil minister.
Javad Owji said he was hopeful that Iran's output would rise further with higher investment in onshore and offshore oilfields, the semi-official Fars news agency reported on Wednesday.
Iran, an Opec member, has increased production and exports in recent months despite US sanctions.
Tehran’s oil exports have faced restrictions since 2018 after the US withdrew from a nuclear agreement reached in the 2015. The subsequent reinstatement of sanctions on the country has rattled its economy and led to social unrest.
The country’s output reached nearly 3.1 million bpd in September, from 2.55 million bpd in 2022, Opec data showed.
Iran’s potential role in Hamas’s October attack on Israel has led to speculation that the US administration may enforce stronger sanctions on Tehran’s crude exports. Iran has so far denied involvement in the attack.
Brent, the benchmark for two thirds of the world’s oil, has given up most gains since October 7 when Hamas, which rules Gaza, attacked southern Israel, killing about 1,400 people and taking more than 200 hostages.
Israel has retaliated with air strikes and a total siege of the enclave, with the Palestinian death toll exceeding 8,000.
“Looking at the upside risk cases, if regional powers are pulled more directly into the conflict, oil supply could be threatened,” said Giovanni Staunovo, strategist at Swiss lender UBS.
A fall in Iranian crude exports by about 300,000 to 500,000 bpd could further constrain an already undersupplied market, potentially pushing Brent prices up to a range of $100 to $110 a barrel, the bank said.
“However, Opec+ has indicated they are ready to take additional measures to support market stability,” Mr Staunovo said.
“Opec+ has sufficient spare capacity to compensate for such a reduction in supplies.”
Oil prices were higher on Wednesday ahead of the conclusion of the US Federal Reserve’s two-day policy meeting later in the day.
Brent was trading 0.59 per cent higher at $85.52 a barrel at 12.01pm UAE time on Wednesday. West Texas Intermediate, the gauge that tracks US crude, was up 0.51 per cent at $81.43 a barrel.
“We know that the Fed is not done hiking the interest rates. We know that [Fed chairman] Jerome Powell won’t call the end of the policy tightening after seeing a blowout growth data,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“The chances are that we won’t hear anything soothingly dovish.”