Leaving OPEC not in Iran’s favor

Leaving OPEC not in Iran’s favor

Baku, Azerbaijan, Feb. 5

By Umid Niayesh - Trend:

Although OPEC's recent decision was not in line with Iran's wishes, the Islamic Republic should maintain its ties with the organization, Iran's oil minister, Bizan Namdar Zanganeh said.

Remaining in OPEC is in favor of Iran, Zanganeh said, the oil ministry's official SHANA news agency reported Feb. 5.

Zanganeh made the remarks while commenting about OPEC's decision last November to maintain its output level.

OPEC members held a meeting in ministerial level November 27, 2014 to evaluate the global oil market and the falling trend of the oil price. Iran and Venezuela wanted to lower the organization's oil output and set a new ceiling level below the current 30 mbpd level. However Saudi Arabia, the cartel's biggest producer as well as other Gulf members rebuffed calls to reverse course and cut output.

Iran's oil minister also explained the reasons of the oil price fall in global markets and said excess crude supply was the main factor behind the price decrease in recent months.

In the first half of 2015, there are about 2 million barrels of extra crude supply a day compared to demand, Zanganeh said. However he said that political factors also were effective in crude price fall.

"We think that the US and its allies have intended to hit Iran," Zanganeh argued.

The Islamic Republic officials, including president Hassan Rouhani, have on numerous occasions argued that the oil price fall is a political issue rather than economical.

The fall in the global crude oil price from almost $110/barrel to below $60/barrel in recent months has imposed pressure on Iranian economy which is already suffering international sanctions. There is uncertainty over how the government will fund its proposed budget for next fiscal year (to start on March 2015), even though it has already dropped the assumed oil price from $100/barrel to $72/barrel.

The OPEC oil basket price was $107.89 in mid-June, but has been in dramatic decline, especially after October. The price stood at $51.77 a barrel on Feb. 3.

Rouhani already confirmed that the Islamic Republic's oil revenues have decreased by 30 percent as a result of price fall.

Edited by CN

Follow the author on Twitter: @UmidNiayesh

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