Iran to consider oil output freeze?

Oil&Gas Materials 25 May 2016 17:41

Tehran, Iran, May 25

By Mehdi Sepahvand - Trend:

It is true that Iran has nearly reclaimed its pre-sanctions oil output, but whether the country will consider a freeze to the output growth depends on the government's policies, said Mohammad Ali Khatibi, former Iranian representative in OPEC.

Therefore it is not clear how the country will respond to the freeze trend at the upcoming OPEC meeting, Khatibi told Trend May 25.

Iran increased its oil output from 1 mbpd in January when it was about to be released from sanctions to the current 2.2 mbpd.

The country has defied calls from other oil producers to hold their outputs at their January levels.

Iran says since it suffered a decline from 2.3 mbpd to 1 mbpd under sanctions, it is entitled to seeking its old quota before considering any freeze.

Speaking about how OPEC handles the market, Khatibi said the organization can regulate the market only if it first manages to reach some internal harmony.

Saudi Arabia was among the countries that tried to represent Iran as the rebellious OPEC member by refusing the freeze. But Iran, which had been left alone for years by world powers, now felt the OPEC was intending to have a similar approach to the world powers.

Iranian Oil Minister Bijan Zanganeh said the call to freeze was only another set of sanctions in disguise, arrived just in time to replace the previous oil embargo.

Plans for a deal between OPEC and non-OPEC producers to shore up crude prices by freezing output fell apart in April when Saudi Arabia demanded that Iran, its main rival for influence in the region, participates as well. Iran's refusal caused crude prices jump by 2 percent on March 14.

Tehran, however has boosted crude output at the expense of prices. The oil-dependent country is severely short of incomes, and is still fighting the foreign pressure.

A meeting of the OPEC exporter group, including Iran, is scheduled for June 2. That event will probably be a scene to see whether Iran will try to punish its rival for triggering a downward price race over a year ago or it will prove to be more of an OPEC member to help improve prices now that it has redeemed its rightful quota.