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Iran says too early to discuss oil output freeze at Algiers
[SINGAPORE] It will be too early for Iran to discuss freezing crude output when global producers meet later this month in Algiers, according to an official from the Persian Gulf nation's state-oil company.
Iran will be ready to decide on capping production once output reaches the level it was before international sanctions were imposed on the country, Mohsen Ghamsari, director for international affairs at state-run National Iranian Oil Co, said in an interview in Singapore Thursday.
That's "slightly" above 4 million barrels a day, which may be achieved by the end of 2016 or early next year, he said. The nation is currently pumping about 3.8 million barrels daily.
Opec members including Saudi Arabia and producers outside the group such as Russia will have to contend with Iran's insistence that it'll keep boosting supplies until it hits its target.
The gathering is aimed at reaching an agreement to cap output in a joint effort to prop up crude prices amid a global glut. A previous proposal fell through in April when Saudi Arabia insisted that Iran take part even though the country was pumping less than it did before the sanctions.
Oil at US$40 to US$50 a barrel is "reasonable" and the market is in "stable condition," Mr Ghamsari said.
National Iranian Oil Co can survive with those prices because its production cost is less than US$10 a barrel, he said. The nation aims to export 2.2 million barrels a day of crude in 2016 and is expected to reach pre-sanctions levels of 2.35 million daily next year.
"Don't expect anything of substance to be agreed on output at the Algiers meeting," said Victor Shum, Singapore-based vice president at industry consultant IHS Inc.
"It will be a non- event and any attempts to manage output won't happen. It will be a dud but that's not a surprise."
Brent crude, the global benchmark, was up 1.4 per cent at US$48.65 a barrel by 1.05pm Singapore time on the London-based ICE Futures Europe exchange.
West Texas Intermediate, the US marker, was 1.6 per cent higher at US$46.21 a barrel in New York.
Saudi Arabia and Russia, the world's top two crude-oil producers, this week pledged to cooperate to stabilise global markets, while failing to announce any specific measures to bolster prices.
Producers that destabilised oil markets have the greatest responsibility to steady them, Iranian Oil Minister Bijan Namdar Zanganeh said last month, according to the Shana news service, without identifying any such countries.
The nation will support any measures to revive prices "while preserving its national interests" to regain market share, Mehr news agency cited Deputy Oil Minister Amir Hossein Zamaninia as saying this month.
Crude has gained about 10 per cent since Opec said in August that it will hold talks in Algiers later this month. Producers have been discussing proposals to limit output after a glut cut prices by more than half from two years earlier.
While Opec adopted a Saudi-led policy allowing members to raise output to protect market share from higher-cost producers in 2014, Iran's supplies were constrained until this year.
The US and European Union tightened sanctions on the Islamic Republic in 2012 over its nuclear program. Cut off from global oil markets, Iran's production fell to around 2.5 million barrels a day compared with more than 4 million in mid-2008.
The country has boosted output quickly since the easing of sanctions in January, though additional increases may be a challenge without international investment and technology.