LONDON/SINGAPORE (Reuters) - Iran’s oil reserves risk becoming stranded assets unless the new U.S. administration eases sanctions that have left the country lagging rivals in output capacity and losing a race against time as the transition to low carbon energy gathers pace. Iran, which sits on the world’s fourth-largest oil reserves, relies heavily on oil revenue, but sanctions have prevented it from pumping at anywhere near capacity since 2018. The penalties were tightened under former U.S. president Donald Trump and although the new President Joe Biden is more conciliatory, top officials in his administration have said Washington would not take a quick decision on any deal with Iran. Iran’s leadership says sanctions have only delayed the moment when it will produce the oil in its vast reserves - and that the world will eventually need it. But the increasing pace of the global energy transition to lower carbon fuels, combined with the impact of the COVID-19 pandemic on energy demand, have brought forward forecasts for when the world will hit peak demand - the point beyond which consumption will permanently fall. Some Iranian officials, including the oil minister Bijan Zanganeh, have said repeatedly Tehran needs to maximise production rapidly - before oil demand disappears and rival producers take what’s left of market share. That idea, however, has been pushed back by factions who see it as a betrayal of future generations. “The dominant narrative is still to keep production optimal long-term - without realising time is running short - and to avoid exporting oil as raw material - without appreciating the refining business may not be a profitable business in the long-term anyway,” said Iman Nasseri, managing director for the Middle East with FGE energy consultancy. Following Biden’s election, Iran’s government under President Hassan Rouhani instructed the oil ministry in December to prepare installations for the production and sale of crude oil at their current full capacity within three months. Provided sanctions are lifted, analysts say Iran could increase output from the current 2.1 million barrels per day (bpd) to a pre-sanctions level of 3.8 million bpd within months. But Iran’s parliament last week rejected a draft budget based on output of 2.3 million bpd from the Iranian year that starts in March, as the lawmakers cast doubt on any immediate relief from the sanctions. A spokesman for Iran’s mission to the United Nations did not immediately reply to a Reuters’ request for comment. (Graphic: Iran oil production capacity link: ) Decades of disruption because of sanctions mean Iran has struggled even to maintain existing capacity, let alone reach its potential. Most regional rival producers, over the last 20 years, including United Arab Emirates, Iraq and Saudi Arabia have each increased output by one to two million barrels per day (bpd) and also built additional capacity, data from the Organization of the Petroleum Exporting Countries showed. Even before new sanctions in 2018, existing strictures had kept Iranian output far below the 6 million bpd that the country produced before its Islamic revolution in 1979. Zanganeh unveiled in December an ambitious plan to increase production capacity to more than 6.5 million bpd by 2040. But analysts believe that is unrealistic. “There has definitely been lost production capacity since mid-2018, and the sanctions have caused some damage,” said Nasseri. “It is possible for Iranian production to reach pre-sanctions levels within months, but going above and beyond that needs more time and significant investment,” he added. Iran’s exports were as high as 2.8 million bpd in 2018, but fell to around 300,000 bpd in 2020, assessments based on tanker tracking show. At the same time a lack of funds and falling exports forced the Iranian energy firms to cut the number of newly-drilled oil wells from 300 in 2018 to 100 in 2020, an industry source said on condition of anonymity, further limiting growth potential. This year, Iranian officials say the exports have risen significantly as the election of Biden made some buyers more willing to risk buying Iranian crude. A senior lawmaker gave a figure as high as 900,000 bpd. (Graphic: Iran crude and condensate production and capacity Iran crude and condensate production and capacity link: ) If the sanctions are lifted, Iran’s production level could exceed 4 million bpd by 2023, Rystad Energy forecast. FGE energy saw Iranian output surpassing 4 million bpd by 2025, plateauing at around 5 million bpd before starting to fall in 2037. But Iran’s crude oil is also mostly heavy and sour which produces more emissions than lighter crudes and has higher processing costs to meet environmental standards that will only get tighter. “Saudi Arabia, Russia, the U.S. and major energy companies are already way ahead of Iran in securing a large portion of oil market share in the medium and long-term,” said Sara Vakhshouri, founder and president of SVB Energy International. (Graphic: oil production in last 30 years link: )