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Iran will not talk until output rises to 4mn b/d

14 Mar 2016 08:26 GMT
Iran will not talk until output rises to 4mn b/d

Dubai, 14 March (Argus) — Tehran will only consider participating in an initiative to curb global oil supplies to raise prices after it has raised its production back to pre-sanctions levels of 4mn b/d, according to Iran's oil minister Bijan Namdar Zanganeh. But until that point, other countries should leave Iran alone.

"So long as Iran's output has not yet reached 4mn b/d, [other producers] should not concern themselves with Iran," Zanganeh said yesterday. "After [we achieve] that, we will go along with them."

In a meeting in Doha last month Russia, Venezuela, Saudi Arabia and Qatar devised a proposal under which the four agreed to freeze their oil production at January levels until July, in order to help tackle a global surplus that has continued to exert downward pressure on oil prices.

But the agreement came with a caveat that specified the four countries would only freeze production if other producers — including Iran — would also commit.

Freed from all-nuclear related sanctions just two months ago, Iran has repeatedly dismissed the suggestion that it would be willing to freeze production now, while it is still producing at well below what it considers as its oil production capacity.

The oil ministry and state-owned NIOC are now working to boost Iran's oil production and exports by around 1mn b/d as it looks to win back the market share it lost while under the sanctions. Argus put Iran's oil output at 2.93mn b/d in February, up by less than 100,000 b/d on December levels.

Iran's vice president Eshaq Jahangiri said on 12 March that Iran's oil exports are up by 400,000 b/d since the removal of sanctions in the middle of January, echoing comments made by President Hassan Rohani on 6 March.

Since falling to a 12-year low in the middle of January, oil prices have recovered by around 46pc. Brent is now trading at $40.29/bl, while WTI is at $38.27/bl.

Zanganeh yesterday said he saw $70/bl as a fair price, although Iran would also "be satisfied" with oil prices lower than that.

"I think the market knows that low oil prices are not good for the world economy, both in the short and longer run," Zanganeh said. "As I have previously said, [even] those who at one point provoked the fall in oil prices are under pressure and do not want the current situation to continue."

Russian energy minister Alexander Novak said last week that a meeting of oil producing countries will take place sometime between 20 March and 1 April, which is likely to centre on proposals to curb oil output.

But Zanganeh said he did not believe the meeting had been confirmed, stressing again the importance of having a general agreement between countries on a plan of action before a meeting takes place. Without one, a meeting "will not have much of an effect".

Novak is travelling to the Iranian capital in his capacity as co-chairman of the Iran-Russia Joint Economic Commission, where he will hold talks with Zanganeh. But while there has been no official word on what the discussions will entail, Zanganeh said Novak "will not only come for the purpose of energy-related matters". ​


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