OPEC moves closer to oil deal as Iran gets offer
Russia remains ‘optimistic’ over output agreement
DOHA: OPEC is moving closer towards finalizing this month its first deal since 2008 to limit oil output, with most members prepared to offer Iran significant flexibility on production volumes, ministers and sources said yesterday. Iran has been the main stumbling block for such a deal because Tehran wants exemptions as it tries to regain oil market share after the easing of Western sanctions in January.
Iran’s rival Saudi Arabia, the biggest producer in the Organization of the Petroleum Exporting Countries, has argued Iran’s output has peaked and it should not be granted major concessions.
On Friday, several OPEC oil ministers including Saudi Arabia’s Khalid Al-Falih met in Doha on the sidelines of a gas forum. Iranian officials attended the gathering although minister Bijan Zanganeh did not come. At the meeting, OPEC member countries proposed Iran cap its oil output at 3.92 million barrels per day (bpd), a source familiar with the proposal told Reuters.
Iran has previously said it would accept a freeze at between 4.0 and 4.2 million bpd. Gulf OPEC sources have said they wanted Iran to cap output at around 3.6-3.7 million bpd - the volume the Islamic Republic is currently producing, according to OPEC estimates.
The source said Tehran had yet to respond to the proposal. Iran’s OPEC governor, who attended yesterday’s talks, said he was optimistic that the producer group would reach a deal when it gathers formally in Vienna on Nov. 30.
Falih said the Friday meeting went well, but declined further comment. If OPEC reaches a deal on Nov. 30, it may also draw support from non-OPEC members including Russia, which promised to cooperate but so far has refrained from any firm commitment.
Russia’s energy minister said yesterday he was “quite optimistic” the OPEC oil cartel will reach an agreement later this month on a planned output cut to shore up prices.
Alexander Novak was speaking after informal talks in Doha with some but not all of his OPEC counterparts ahead of the cartel’s meeting in Vienna on November 30. The cartel’s 14 members have been at odds over the details of the production cut agreed in Algiers in September, which is supposed to lead to a wider agreement with non-OPEC producers including Russia.
Iran has refused to join in until it has restored its market share following the lifting of international sanctions in January. Iraq has asked for an exemption, saying it needs the income to fund its war against the Islamic State jihadist group. Asked whether he thought Iraq would agree to a freeze or cut at the Vienna meeting, Novak said: “I would say that I am quite optimistic at this point.
“Today’s discussions... do instil optimism in me. “And I believe that the consultations of technical experts, which are going to be held soon, and other consultations ahead of the 30th November meeting... would result in an agreement.” He also told reporters that Russia was willing to limit production to “certain levels”. “We believe that demand will continue to grow. “Even today we have discussed numbers that demand will grow by 1.1, 1.2 million bpd (barrels per day) next year.
OPEC ministers agreed in Algiers to reduce production to 32.5-33 million bpd from the 33.47 million pumped in August, the first cut in eight years.
Falih told the Al-Arabiya news channel in an interview aired on Thursday that he was “still optimistic that the consensus reached in Algiers to put a ceiling to production will be implemented by adopting ceilings for countries”. Algeria’s energy minister Noureddine Bouterfa said discussions yesterday had been “good” and that “maybe” 32.5 million bdp would be the production target spoken about in Vienna. Iraq and Iran have been asked to freeze their output levels.