Iran sig­nals tough stance in oil pro­duc­ers' talks

The Pak Banker - - MARKETS/SPORTS -

Iran sig­naled on Wed­nes­day it would take a tough line in talks among oil pro­duc­ers on re­strain­ing pro­duc­tion, say­ing it would con­tinue in­creas­ing its out­put un­til it reached lev­els seen be­fore in­ter­na­tional sanc­tions were im­posed. "Ask­ing Iran to freeze its oil pro­duc­tion level is il­log­i­cal ... when Iran was un­der sanc­tions, some coun­tries raised their out­put and they caused the drop in oil prices." Iran's OPEC en­voy, Me­hdi Asali, was quoted as say­ing by the Shargh daily news­pa­per.

"How can they ex­pect Iran to co­op­er­ate now and pay the price?" Venezue­lan Oil Min­is­ter Eu­lo­gio Del Pino, Iraqi Oil Min­is­ter Adel Ab­del Mahdi and Qatari En­ergy Min­is­ter Mo­ham­mad bin Saleh al-Sada were to travel to Tehran for talks with their Ira­nian coun­ter­part Bi­jan Zan­ganeh on Wed­nes­day in a bid to reach a deal to re­strain out­put and prop up sag­ging prices.

A spokesman for the Ira­nian min­istry said the talks would be­gin at 2 p.m. (1030 GMT). Un­der a pro­posal which could lead to the first global oil pro­duc­tion deal in 15 years, pro­duc­ers in­clud­ing Saudi Ara­bia and Rus­sia would freeze their out­put at Jan­uary lev­els. But Saudi Ara­bia said on Tues­day the deal de­pended on the co­op­er­a­tion of other big pro­duc­ers.

"We have re­peat­edly said that Iran will in­crease its crude out­put un­til reach­ing the pre­sanc­tions pro­duc­tion level," Asali was quoted as say­ing.

Iran ex­ported around 2.5 mil­lion bar­rels per day (bpd) of crude be­fore 2012. Sanc­tions cut that to around 1.1 mil­lion bpd. A Reuters sur­vey re­leased on Jan. 5 showed Ira­nian pro­duc­tion at 2.9 mil­lion bpd in De­cem­ber.

The sanc­tions, im­posed over Iran's dis­puted nu­clear pro­gram, were lifted last month af­ter an agree­ment with world pow­ers, al­low­ing Tehran to re­sume sell­ing its oil freely in world mar­kets.

Two non-Ira­nian sources close to the OPEC dis­cus­sions told Reuters Iran might be of­fered spe­cial terms as part of an out­put freeze deal.

"Iran is re­turn­ing to the mar­ket and needs to be given a spe­cial chance, but it also needs to make some cal­cu­la­tions," said one source.

The sources did not elab­o­rate on the spe­cial terms, which could be any­thing from set­ting lim­ited pro­duc­tion in­crease lev­els for Iran to link­ing fu­ture out­put rises to a re­cov­ery in oil prices.

The last global deal, in­volv­ing OPEC and non-OPEC pro­duc­ers, dates back to 2001, when Saudi Ara­bia per­suaded Mex­ico, Nor­way and Rus­sia to con­trib­ute to pro­duc­tion cuts, al­though Moscow never fol­lowed through and raised ex­ports in­stead.

The fact that out­put from Saudi Ara­bia and Rus­sia is near record highs com­pli­cates chances for any new agree­ment.

The price of bench­mark Brent crude rose as high as $35.55 a bar­rel on Tues­day on hopes for a pro­duc­tion deal, but it has since dropped back to $32.15, show­ing many in­vestors doubt an agree­ment can be reached, that it would be re­spected, and would boost oil prices much. United Arab Emi­rates oil min­is­ter Suhail bin Mo­hammed al-Mazrouei tweeted on Tues­day that the coun­try's oil pol­icy was open to co­op­er­a­tion with all pro­duc­ers to­ward the mu­tual in­ter­est of mar­ket sta­bil­ity.

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