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Tehran, apparently confident that it soon will be free of sanctions, is now urging OPEC to cut production to allow for the return of Iran to the world oil market.
Iranian Oil Minister Bijan Zanganeh said April 14 in Tehran that the cartel’s insistence on maintaining production at 30 million barrels per day in an effort to reclaim lost market share would leave no room for his country’s oil.
“Even the most conservative OPEC member states do not believe that OPEC production should exceed 30 million barrels per day,” Zanganeh said at a news conference, “and we believe that this amount should be cut by at least 5 percent.” That would be a cut of about 1.5 million barrels a day.
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In fact, the minister said, as soon as the sanctions are lifted – if they’re lifted – Iran could increase its oil output “very fast. … Within a few months after the removal of sanctions, Iran will be able to increase its oil production to levels that existed before the sanctions were imposed.”
Since September 2014, Iran has been among several of OPEC’s 12 members who urged the cartel to reduce production because of the sharp decline in oil prices. But at its meeting in November, OPEC, led by Saudi Arabia, decided to maintain production at 30 million barrels a day in an effort to win back market share from other producers, mainly US producers of shale oil.
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And although Iran, a Shi’a Muslim state, is an adversary of OPEC’s most influential member, Sunni Saudi Arabia, Zanganeh said Tehran has “no quarrel” with any of the cartel’s other 11 producers and expects them to do the right thing. “OPEC is mature enough to regulate itself so that the market would not be harmed after Iran returns to its previous quota,” he said.
Last month, Zanganeh said that once the sanctions are lifted, Iran is prepared to increase oil production by 1 million barrels per day based on the combined production capacity of oil fields that have been out of use because of the sanctions.
Under the sanctions’ constraints, Iran now produces an estimated 2.7 million barrels of oil per day, and of that, about 1 million barrels are exported.
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Although Zanganeh said Tehran has “no quarrel” with other OPEC members, he said his country has not been affected by certain countries efforts to damage Iran’s economy by keeping oil prices low. No prizes for guessing who that comment was directed at.
“The countries that longed to hurt Iran by reducing [the price of] oil used whatever they could resort to,” he said. “They reduced the prices as much as they could and it is improbable that the prices would go down further beyond the current levels.”
Zanganeh is the second OPEC oil minister this month to call for the cartel to cut production. On April 9, Samir Kamal, Libya’s oil minister, also called for a reduction to prepare for Iran’s possible return to the global oil market. But Kamal called for a more modest cut of 800,000 barrels of oil per day, a little more than half the cut sought by Zanganeh.
By Andy Tully of Oilprice.com
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Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com