While the two officials are said to be talking about a number of issues like demand and supply, global oil market conditions, and crude prices, the main axis is expected to be negotiation over talking Iran into joining a possible oil freeze plan.
Advertisement
The two ministers said Monday that they will act “together or in cooperation with other oil producers” and agreed to set up a “joint monitoring group” to offer recommendations to prevent price fluctuations. Cut off from global oil markets, Iran’s production fell to around 2.5 million barrels a day compared with more than 4 million in mid-2008. National Iranian Oil Co. can survive with those prices because its production cost is less than $10 a barrel, he said.
The Organisation of Petroleum Exporting Countries (OPEC) and Russian Federation had previously attempted to curb the supply glut earlier this year, but the agreement collapsed in April due to tension between Saudi Arabia and Iran.
Iran stood ready to continue increasing its production, possibly taking it past its pre-sanction levels towards the beginning of 2017.
Major oil producers are talking up the prospect of a production freeze … again. Additional downward pressure on crude oil prices stemmed from the weekly Energy Information Agency (EIA) inventory report which indicated crude inventories increased by 2.275 million barrels per day.
OPEC and Russian Federation are expected to revive talks for a global deal on production in Algeria.
The idea is that an output cap will help put a floor under prices, which have risen from $26 per barrel in February to $45 but are still down more than 50% since 2014.
November Brent crude futures rose 25 cents to $47.51 a barrel by 1345 GMT, while USA crude futures added 29 cents at $45.12 a barrel.
The National Iranian Oil Company’s (NIOC) director for global affairs told CNBC Wednesday Iran’s oil output had reached 3.8 million barrels per day (MMBPD) and it would increase production. “Saudi Arabia had previously refused to sign the output freeze agreement in April and so this is a step in the right direction for Brent crude”, added Kapadia.
Advertisement
Libya and Nigeria, which have also suffered from production disruptions, should be given the same consideration.
