DUSHANBE, February 24, 2016, Asia-Plus – Iran’s minister of petroleum has called a proposal by Saudi Arabia and Russia to freeze oil production “ridiculous” as it seeks to boost output after years of sanctions constrained sales. Crude prices reportedly fell after the comments.
The proposal by Saudi Arabia, Russia, Venezuela and Qatar for crude oil producers to cap production at January levels puts “unrealistic demands” on Iran, Oil Minister Bijan Namdar Zanganeh said on February 23, according to
Shana
, an official news service of Iran’s Ministry of Petroleum.
“It is very ridiculous, they come up with the proposal on freezing oil production and call for this freeze to take place in their 10 million barrels a day production vis-a-vis Iran’s 1 million barrels a day” planned production boost, he said. “If Iran’s crude oil production falls, it will be overtaken considerably by the neighboring countries.”
Financial news and media company,
Bloomberg
, reports that the three OPEC members and Russia are seeking to halt the 40 percent drop in oil prices over the past year resulting from a global crude glut. Iran is seeking to increase output by 1 million barrels a day this year after international sanctions on its oil industry were lifted last month.
The Organization of Petroleum Exporting Countries, led by Saudi Arabia, abandoned its production target in December, allowing members to pump as much as they wanted to win back market share from higher-cost producers. Iran produced 2.86 million barrels a day in January, while Saudi Arabia pumped 10.2 million barrels daily in the month, according to data compiled by
Bloomberg
.
Zanganeh made his remarks before his Saudi counterpart Ali al-Naimi addressed the IHS CERAWeek conference in Houston.
According to
Bloomberg
, Saudi Arabia had insisted that other producers would have to join in before it would consider curbing production. Al-Naimi said later Tuesday in Houston that Saudi Arabia won’t cut oil production as other countries would be unlikely to assist in restraining output. Instead, high-cost producers will have to “lower costs, borrow or liquidate” to cope with the slump in oil prices, he said.
Iran is poised to raise output to 3.6 million barrels a day, an increase of 600,000 barrels a day, by the middle of this year, the International Energy Agency (IEA) said on February 22 in its medium-term oil market report. The Iranian increase will balance the decline in U.S. light, tight oil forecast for this year, the IEA said.
Iran’s exports of crude and condensate reportedly fell to 1.4 million barrels a day on average in 2014 from about 2.6 million in 2011, before the U.S. and European Union intensified sanctions on the country.
Chicago Tribune
reports that oil is down about 14 percent this year on speculation a global glut will persist amid the outlook for increased exports from Iran and brimming U.S. stockpiles. Iran will add more output capacity than any other member of the Organization of Petroleum Exporting Countries over the next six years as it seeks to regain lost market share after the removal of sanctions, according to the International Energy Agency.
