While oil ministers from Saudi, Russia, Qatar and Venezuela have agreed to the freeze rather than a cut in production, Iran will now decide have to decide today when it holds talks in Tehran with Iraq and other oil producing nations to state its position.
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Iran said on Wednesday that it would reject any effort to limit its oil output, dealing a blow to a proposal by Russian Federation and Saudi Arabia that petroleum exporters freeze production, but an Iraqi oil ministry official said in an interview that his country would be willing to accept limits to bolster prices.
Mahdi Asali, Iran’s OPEC envoy, said his country will in fact keep increasing its crude exports until it reaches levels attained before global sanctions were imposed on Tehran over its nuclear program.
Qatar, the United Arab Emirates and Venezuela had said they would join a production freeze, but the pact ultimately depended on bringing aboard Iran, which is expected to become the region’s second-largest oil producer behind Saudi Arabia as its energy sector recovers.
Iranian Oil Minister Bijan Zanganeh met his counterparts from Venezuela, Iraq and Qatar in Tehran for over two hours.
As the Iran nuclear agreement took effect last month, the sanctions were lifted and Iran says that within the next six to 12 months it intends to send another million barrels of oil a day onto the world market.
“Asking Iran to freeze its oil production level is illogical”, he said.
The move comes as extremely low oil prices are crippling the economy of oil producing countries. However, Iran’s oil production was significantly impacted, dropping by over 15%.
In December the Iranians pumped 2.9 million barrels, almost three times as much as they were allowed to export under the sanctions regime. They agreed to act only if other producers made similar freezes.
MidEast stocks were mixed, with Saudi Arabia gaining before an oil producers’ meeting that could result in curbed output, which would boost oil prices.
Zanganeh had said on Tuesday that Iran “won’t relinquish” its market share but added that “there was room for discussion and examination” of moves to fix a production ceiling. That’s down only 4% from the record high production reached in April, and still slightly ahead of year-ago production levels. “We could see… bankruptcies surpass Great Recession levels as companies struggle to remain solvent”, John England, a vice chairman for Deloitte, said. Unless producers agree to cut their output, the global oversupply will persist, according to BNP.
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The country is reportedly at least one million barrels per day below its capacity at pre-sanction levels.
