Iran is ready to take part in a further extension of the OPEC oil production cut deal, the country’s Deputy Minister for Trade and International Affairs said at an event yesterday. The cartel is currently discussing extending the deal to the end of 2018 to ensure stable prices but not all agree it is necessary.
“We are pleased with the way OPEC has decided to cut some production in order to bring a semblance of balance between supply and demand. We think that this trend will continue and we will support this trend,” Amir Zamaninia said at the Oil & Money conference, taking place in London.
Late yesterday, Zerohedge tweeted that there was general agreement for an extension, according to an unnamed Iranian deputy oil minister. Earlier this week, however, Kuwait’s Oil Minister said an extension of the agreement may be unnecessary if all OPEC members comply with their production quotas. OPEC officials are masters of mixed signals and we’re likely to see more of these contradicting statements in the coming weeks.
Iran was the only OPEC member that was allowed to increase its oil production, to 3.797 million bpd, under the agreement and is currently producing a bit over this: between 3.8 and 3.9 million bpd, according to Zamaninia. Also, Iran plans to increase its production capacity to 4.7 million bpd by 2021 but in the meantime, it would “match” its production rate and capacity expansion with whatever OPEC decides at its November 30th meeting in Vienna.
Oil prices are currently being supported by the conflict between Baghdad and Kurdistan, which has now become an open fight with a focus on Kirkuk and surrounding oil fields. For a longer-term price stabilization, an extension of the cut deal seems to be unavoidable: if the cartel and its partners decide to leave the March 31, 2018, deadline unchanged, we can reasonably expect a steep price drop as 1.8 million bpd come back on global markets.
By Irina Slav for Oilprice.com
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