Iranian Oil Minister Bijan Zanganeh met counterparts from Venezuela, Iraq and Qatar on Wednesday but did not say if Iran would cap its output in keeping with the move by Russia, Saudi Arabia and Iraq.
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Mehdi Asali, the Iranian envoy to the Organization of Petroleum Exporting Countries, was quoted in Iranian media as saying that, with sanctions pressures easing in response to July’s nuclear agreement, asking Iran to hold steady was “illogical”.
Trying to counter low prices, the two biggest oil producers – OPEC power Saudi Arabia and non-OPEC member Russian Federation – have said they would freeze production, but only if other big oil nations did the same.
The fate of the first global oil deal in 15 years could be decided on Wednesday when OPEC members travel to Iran to persuade the country to participate in a deal to freeze output levels, possibly by offering Tehran special terms.
Iran should have increased production by 500,000 barrels a day by March 20, the end of the Iranian calendar year, Shana reported on Wednesday, citing Roknoddin Javadi, managing director of National Iranian Oil Co.
As benchmark prices plummeted 70 percent in the past 18 months, from peaks of more than $100 per barrel in June 2014 to below $30 last month for the first time in over a decade, economic activity shrunk by $250 billion and $140 billion, respectively, according to the consulting firm Rystad Energy. Sanctions cut that to around 1.1 million bpd.
A production cap for top oil producers isn’t feasible when a record amount of oil is being pumped, according to one analyst.
Natixis lead oil market analyst Abhishek Deshpande told journalists in Paris that a freeze in production was not enough and is likely to unravel, with only an aggressive cut sufficient to mop up excess crude in the market.
Iran just had its sanctions lifted and wants to win back the market share it lost to Saudi Arabia and other countries while under export sanctions.
Iran did not agree to keep its output low, as it has only recently been released from sanctions that eroded its share of oil markets worldwide.
USA crude jumped $1.06 shortly after Asian markets opened, and was trading up 77 cents at $31.43 a barrel as of 2346 GMT, up 2.5 percent.
Meanwhile the United Arab Emirates energy minister Suhail al-Mazrouei has said that the agreement will have a positive impact on oil markets. “So we’ve killed OPEC”.
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“This decision of [top oil producers] to freeze production is a publicity stunt more than anything”, said Josh Mahony, a market analyst with IG, based in London.
