The agreement between some OPEC members and non-OPEC oil producers on freezing oil output level is a measure against the Islamic Republic, the Iranian government’s spokesman, Mohammad Bagher Nobakht believes.
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A day after Iran’s Oil Minister Bijan Namdar Zanganeh ridiculed a decision by the Organization of the Oil Petroleum Exporting Countries (OPEC) to freeze oil output, the Islamic Republic’s Ambassador to Oman said his country “is committed to OPEC’s oil output freeze decision”.
That is more than any other energy source, although its share stays below 10 percent of the mix, as the EU Emissions Trading System (ETS), which BP says it supports, remains too weak to drive a faster transition to lower carbon sources.
Demand growth, although probably not as strong as past year, would continue, he said, while new supplies would contract. Saudi Arabia, however, had made it clear that the freeze would happen only if both Opec and non-Opec producers were committed to adhering to the plan.
“There is no sense in wasting our time seeking production cuts”, al-Naimi said Tuesday.
President Muhammadu Buhari’s trip to Saudi Arabia and Qatar may have suffered a little set back with the tussle between Saudi and Iran.
Saudi Oil Minister Ali al-Naimi told a packed house at an investment conference in Houston that a production freeze is just the start of a process meant to cut into higher crude oil inventories held in storage.
JPMorgan, the largest USA bank by assets, said on Tuesday it planned to increase provisions for expected losses on energy loans by US$500 million.
World oil prices appear on course to be lower for the longer term after Saudi Arabia ruled out production cuts and suggested high-cost producers should be allowed to fail to help rebalance the market.
Crude oil prices gained a lot of momentum in the last week on speculation of an output cut and/or production freeze.
“The producers of these high-cost barrels must find a way to lower their costs, borrow cash or liquidate”, Naimi said. Brent, the global benchmark for crude, settled up $1.14, or 3.4 percent, at $34.41 a barrel after market sources cited loading problems for North Sea crude.
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Also pressuring prices, the American Petroleum Institute (API), an industry group, said on Tuesday that crude inventories rose by 7.1 million barrels last week, far exceeding expectations of a 3.4 million barrel rise. The country’s production has slumped since sanctions were imposed on its exports.
