Opec: Iran looks for long-term strategy

Iran has little hope of altering Opec strategy at tomorrow's ministerial meeting but is calling for a long-term plan to ensure market balance that would include a return to production allocations but would not crimp Iran's own export build when US and EU sanctions are removed, probably early next year.

Oil minister Bijan Namdar Zanganeh today laid the blame for low oil prices on those Opec members that have boosted output so total Opec production far exceeds the 30mn b/d ceiling that was in place prior to the November 2014 ministerial meeting. This is a pointed reference to Saudi Arabia and other proponents of the market-share strategy. Zanganeh compared what Iran regards as the misappropriation of its market share by fellow Opec members to sanctions.

On tomorrow's meeting, the minister said he would bring up all of these issues but: "We will listen for now. In my opinion, until we feel there is a political will to decrease production, it is not possible to talk about or discuss details of this issue."

He cast doubt on whether the market-share strategy is working. "It seems that the level of shale oil hasn't decreased but it hasn't increased significantly [either]. But Opec member countries have lost so much money and it doesn't seem that we can change the situation in the short-term. It needs a long-term strategy should be taken in Opec."

He indicated this strategy would include production limits: "We think that Opec needs to return to the shares of its member countries, and commit, stick to this share and follow it in a fair way."

Zanganeh said a supply cut was needed to balance the market, but that was only possible if there was consensus within Opec. He sees the issue of co-operation with non-Opec producers as a red herring.

He said Iran, under sanctions, has no responsibility for the fall in prices, pointing instead to "Opec members and others who have produced more than their level of the ceiling of Opec and increased their production in place of Iran and [contributed] to this oversupply in the market".

He said Iran would seek to reclaim its market share, and that other Opec members should make room for it. "We do not expect our colleagues in Opec to put pressure on us to continue sanctions against Iran. It means they want sanctions to continue against the Iranian nation, and it is not acceptable". He also said: "To want Iran to balance the market, I think is not an informed or correct decision… The responsibility to balance the market is on those who raised supply and are still supplying above the production ceiling to the market. The responsibility has to be taken by them."

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