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OPEC+ deal to positively affect Iran, says former rep at cartel

Oil&Gas Materials 16 December 2018 18:38 (UTC +04:00)

Tehran, Iran, Dec.16

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The newest OPEC output cut agreement and Iran’s exemption from the production cut, can reduce the power of US sanctions over time, the former Iranian representative at OPEC Mohammad Ali Khatibi told Trend

“There were serious concerns about the oil sale situation after the increase in OPEC oil output by more than 2 million bpd this year, that caused turbulence in the market. But OPEC agreed to cut 800,000 bpd for member states and 400,000 bpd for non-OPEC" he said.

"The deal to cut oil production shows that OPEC still controls the oil market and does not allow supply surplus to reduce the price. This would be in everyone's interest, and a good achievement for Iran. The agreement is in favor of exporters who did not participated in the new agreement.”

He went on to add that Iran’s situation is different from others, who are normally producing and exporting their oil. “It is under sanctions and in a special situation, when output cuts should not be applied to it.”

Khatibi pointed out that if Iran was in an ordinary situation, it would have participated in OPEC agreement and would cut its output. Its oil output has already dropped due to US sanctions, he added.

Speaking about Iran’s ability to produce oil with full capacity during sanctions, Khatibi said that Iran can produce its oil in any circumstances. “The sanctions would influence the oil sale. If Iran cannot sell its oil, it should not produce, as it has to reserve them."

Khatibi noted that since Iran is only sanctioned by US and not by the UN or the EU, the current sanctions are lighter than the previous ones.

“I think the new round of sanctions would affect Iran’s oil exports, but Iran can export its oil as much as it needs. However, if prices have been dropped, it would be under more pressures,” he said.

OPEC agreement to control output and Iran’s exemption from the output cut makes hope that Iran would not feel those pressures,” he added.

The sanctions in early months had some effects on Iran but gradually, as time goes by, it loses its effects and the sanctioned country finds a mechanism to do its job, noted Khatibi.

“Early sanctions have psychological effects, and gradually lose their effect.”

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