Iran has not yet made a decision on whether or not it will join the OPEC meeting next month, and according to officials there, production levels have not reached a point at which the country can ink an output agreement.
This time around, September’s OPEC meeting is an informal one set to take place in Algiers, with a main agenda of talks surrounding the tightening of oil output. A spokeswoman for the nation’s oil ministry said that no decision has been made about attending the meeting, and that the country has not made a decision on joining an output cap. That spokeswoman said that the country would probably not reach pre-sanction production levels prior to the September meeting.
The oil market fluctuated a bit in reaction to the news. US crude futures closed on Tuesday at $46.62 a barrel. Brent closed just above $48.50 per barrel. Iran was the holdout in creating a cap agreement in April, citing production levels in January that were far below historic levels.
Iran has previously said that it will not consider a cut in production until its exports increase by 1.5 million barrels per day, above the current level of 1.1 million per day. Iranian officials added that they would not support an emergency meeting unless there was a consensus on what would be done. One oil official said “If the meeting takes place and there is no agreement, it will have a negative impact on prices.”
That same official said that the country might support such a meeting if the country was not asked to reduce its production. Iran is still in the process of recovering from the effects of nuclear sanctions. Iran had said that it planned to increase production by 500,000 barrels per day in short-term production, with a goal of reaching 1 million barrels per day by the end of the year. Related: What The Fall Of OPEC Means For Global Oil Markets
Giant oil producer, but non-OPEC member Russia has shown more interest in discussing a production freeze. Energy minister Aleksandr Novak said in an interview published on Monday that the discussion between Russia and key OPEC member Saudi Arabia is ‘’developing in a tangible way’’.
Although OPEC production is expected to fall back a bit in August after having reached an 8-year peak in July as a result of increased Saudi output, storage levels remain elevated. And as absurd as it may sound, OPEC’s big players might again not be interested in a production freeze as they might just not need it as much as markets continue to rebalance due to reduced supply from Nigeria, Venezuela and Libya.
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Lincoln Brown for Oilprice.com
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