Iran rejects effort to freeze oil output

Iran’s envoy to the Organization of the Petroleum Exporting Countries, Mahdi Asali, said Tehran intends to step up exports until they reach the level it had before worldwide economic sanctions were imposed on it in an effort to force Iran to agree to a ban on its suspected development of nuclear weaponry.

Venezuela, Russia, Saudi Arabia and Qatar on Tuesday agreed to freeze production, after Venezuela unsuccessfully sought a cut in production among OPEC members.

Iran, OPEC’s fifth-largest producer, having stated how “illogical” it is to freeze production and sending its first oil tanker in four years to Europe, finally declared its support for the oil output freeze.

Natixis projects excess crude to average more than 1.37 million barrels per day (bpd) in 2016 if OPEC sticks to current strategy on market share and could hit 1.8 million bpd for the next six months if Iran resumes production to pre-sanctions levels, Iraq adds capacity and Saudi Arabia increases output.

Five years ago, before the sanctions were placed, Iran was supplying over 4 million barrels of oil to the world every day.

The United Arab Emirates’ energy minister, Suhail Mohamed al-Mazrouei’s, refused on Wednesday to discuss the Doha proposal after giving a keynote address at a Dubai conference in which he mentioned low oil prices only in passing. And while it appears to have fallen apart, that it was announced alone signals just how much pain Riyadh and Moscow – the top two oil producers in the world – are feeling from the downturn in oil prices.

IRNA quoted Rokneddin Javadi, Iran’s deputy oil minister, as saying the shipment, the first in five years, marked “a new chapter” in Iran’s oil industry.

But the meeting in Tehran between historic rivals Iran and Iraq – as well as Venezuela – provided some support for the beleaguered commodity Wednesday.

Some of the major oil producers are pledging to put a cap on production in hopes of boosting oil prices from their lowest point in more than a decade. “One should wait to see its effect on prices”, he said.

The International Energy Agency expects global oil demand of 96 million barrels a day in 2016, though production crossed 97 million daily barrels towards the end of 2015. With markets seeing the meetings as a tacit agreement that prices need a level of control, oil staged a major rally in early Wednesday trading.

Goldman Sachs analyst Damien Courvalin said late Tuesday in a research note that “such a freeze will have little impact on the oil market” and that there’s “high uncertainty that it even materializes”.