Iran: Full Return to International Oil Market Not Negotiable

Oil prices have collapsed from more than $100 a barrel last summer to almost $40 a barrel after Saudi Arabia led a decision to maintain production in the face of a deep glut, a switch from its longstanding policy of modifying output in order to avoid the world from becoming oversatured or running short of oil. Iraqi Oil Minister Adel Abdel Mahdi said his country was sticking to its current production plans after enjoying a significant rise in output this year. “It is our right and anyone can not limit us to do it”, he reportedly said in Vienna. This would mark the first Opec initiative to deal with the falling prices since the continuing downturn started in June past year.

The Energy Intelligence newsletter reported that Saudi Arabia, the largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), was ready to propose a cut of 1 million barrels a day in output at a meeting of the oil cartel on December 4, if non-OPEC countries like Russian Federation joined in.

Smaller nations are expected to put further pressure on Saudi Arabia to reduce oil production levels later today when cartel members meeting in Vienna. Aleyya also mentioned that the unstable prices were of benefit to consumer states or developing countries as the low prices allowed them to use the money to increase the rate of local and foreign investments.

It should be noted that Bloomberg recently wrote that Iran’s statements on the eve of the OPEC meeting would affect the reduction of oil prices.

– Says that Iran will “welcome any proposal” that wants to “make balance between production and supply and demand in the market”, suggesting that Iran would be willing to participate in a collaborative OPEC cut. “And, totally, it means we will be close to 3.8 million-3.9 million b/d total production of Iran”, Zanganeh said.

Iraq is expected to raise its output to 4.38 million bpd in 2016, a 13 percent increase over this year, according to Thomson Reuters Oil Research and Forecasts, while Iran’s will jump 19 percent to 3.38 million bpd. Total volume was more than double the 100-day average.

Nevertheless, he said Iran will welcome any proposal to create a balance between supply and demand in the market.

Bringing the ceiling in line with real production could help bridge the gap in views between OPEC and non OPEC.

Indonesia became an OPEC member in 1962, before suspending its membership with effect from January 1, 2009.

Such a cut would be conditional on the participation of non-OPEC producers including Russia, Mexico and Kazakhstan and wouldn’t be agreed on Friday, according to the report.

OPEC made the historic decision to maintained its production levels previous year despite a more than 50 per cent fall in price over the past 18 months.