Iran expresses optimism over OPEC output reduction deal

Despite recent plans to boost its own production, Iran's oil minister has expressed optimism that OPEC nations will come to an agreement on output reduction in Vienna next week.

MENA

2 min read

The New Arab

21 November, 2016

OPEC is seeking to reduce output for the first time in eight years [AFP]

Iranian Oil Minister Bijan Namdar Zanganeh has expressed optimism that OPEC members will agree to proposed production cuts after meeting with the group’s secretary general in Tehran on Saturday.

"It is highly probable that OPEC members will reach a consensus in the November meeting,” Zanganeh said in comments published by the Iranian Oil Ministry’s Shana news service, referring to an upcoming meeting set to take place in Vienna this week.

“I think OPEC members honour the agreement and would try to put it into action.”

On Saturday Zanganeh met with OPEC secretary-general Mohammed Barkindo in Tehran to discuss an accord aimed at reducing output by up to 1.3 million barrels per day.

OPEC is seeking to reduce output for the first time in eight years amid dwindling oil prices.

However, amid complications in negotiating a deal, the International Energy Agency has predicted another year of oversupply in 2017, and Goldman Sachs estimated that if OPEC fails to secure a deal costs per barrel could fall to around $40.

Ministers from Saudi Arabia and Algeria have recently reiterated commitments to reduce OPECs total daily production to 32.5 million barrels.

But doubts still remain over Moscow’s commitment to such a deal, while Iran — despite Zanganeh’s expressions of optimism — has recently said it plans to boost oil production from 3.89 million barrels per day to 4.28 million barrels per day, with Tehran keen to take advantage of export opportunities previously limited by international sanctions against its nuclear program.

Iraq has also expressed a reluctance to cut production citing the necessity of oil revenues to fund it’s ongoing war with Islamic State militants currently focused on the city of Mosul.

Such factors have cast doubt over OPEC’s ability to deliver on its proposed output reduction deal.

However, late on Sunday Iraq’s Oil Minister Jabbar al-Luaibi said that that Baghdad would present three new proposals in Vienna in a development that could see the country move closer to resolving its differences with OPEC.

Speaking in Marrakech, the Moroccan capital last week, Barkindo said that OPEC was “all hands on deck” to reach an agreement in time for the Vienna meeting, adding that OPEC members were aiming for an oil price of between $55 and $60 deemed a fair price for both producers and consumers, according to Bloomberg.