Iran quashes calls to freeze oil production

Petroleum Minister Bijan Zangeneh insists Islamic Republic will not give up its oil production quota, after meeting his Iraq, Venezuela and Qatar counterparts

A file photo of Iran’s Petroleum Minister Bijan Zangeneh.
A file photo of Iran’s Petroleum Minister Bijan Zangeneh.

Iran’s Petroleum Minister Bijan Zangeneh has stressed that the Islamic Republic will not give up its quota in the international crude oil market, ending hopes that the country would heed desperate calls from other oil producers to hold output.

“What is important is that, first, the market is oversupplied, and, second, that Iran will not overlook its quota,” Zanganeh told the Sana news agency following a meeting with the visiting Georgian Energy Minister Kakha Kaladze in Tehran on Tuesday.

Zanganeh earlier also added that Tehran will be hosting a tripartite ministerial meeting to be participated by his Iraqi and Venezuelan counterparts on Wednesday.

“Iraqi Oil Minister Adil Abdul-Mahdi and Venezuelan Oil Minister Eulogio Del Pino are scheduled to arrive here for a tri-partite meeting on Wednesday,” he added.

To a question on the joint meeting of Russian, Venezuelan, Qatari, and Saudi oil ministers in Doha on Tuesday, Zangeneh said he was not “informed” about the outcome of the meeting.

“According to reports about the meeting which I am still not informed about its final results, there were talks over stabilising the production quota,” he added. “It requires discussion and examination to be seen what has been their point,” Zangeneh said.

Zanganeh, according to media reports, later on Wednesday held a four-way, closed-door talks in Tehran with his counterparts from Iraq, Venezuela and Qatar.

On Tuesday, Saudi Arabia, Russia, Venezuela and Qatar conditionally agreed to cap their output at last month’s levels in order to halt a slide that has pushed oil prices to their lowest point in more than a decade. Oil prices recently plummeted below $30 a barrel, the lowest in 13 years.

The four countries made their announcement following an unexpected meeting in the Qatari capital of Doha that pointedly did not include Iran. They agreed to act only if other producers made similar freezes.

Analysts had however predicted that Iran – recently emerging from its crippling sanctions era – would be adamant to maintain its target to increase production by 500,000 barrels per day (bpd) of oil, eventually raising it by 1mn bpd.

Amrik Sembi, head of Liquid and Bulk Commodities, at OpenLink told “Iran, with its ambition to regain market share and boost production by 1mn bpd after recent sanctions being lifted, is less likely than its neighbour Iraq to implement any caps.”

“Even if an agreement is reached, that doesn’t necessarily mean prices will increase or inventories will reduce. Either way for European markets I think there is one thing we can expect, volatility,” he told this website.

Iran is eager to ramp up its exports now that sanctions related to its nuclear program have been lifted, saying recently it aims to put another 500,000 bpd on the market. Figures from the International Energy Agency show it pumped 2.9mn barrels daily in December, before sanctions were lifted.

Iran used to export 2.3mn bpd but its crude exports fell to 1mn bpd in 2012.

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