A day after a global deal was reached by world’s top oil exporters to freeze oil output in a bid to stabilise an oversupplied market, Iran is determined to stick to its guns and increase oil output.
Venezuelan oil minister Eulogio Del Pino and Iraqi oil minister Adel Abdel Mahdi will travel to Tehran later today to convince Iran to abide by the global deal. The leaders will hold talks with Iranian oil miniter Bijan Zanganeh.
Iran has pledged to raise oil supply steeply in the coming months as it looks to regain the market share lost after years of international sanctions, which were lifted in January.
On Tuesday, top global oil exporters including Russia, Saudi Arabia, Venezuela and Qatar met in Doha and agreed to freeze output at the January levels to tackle the global surplus. But the deal was also dependent on the approval from other top producers like Iran who was absent from the meeting.
We have “agreed to freeze the production at (the) January level provided that other major producers follow suit,” said Qatar’s Energy Minister Mohammed bin Saleh al-Sada who is also the acting President of OPEC oil cartel.
“The reason we here agreed to a potential freeze of production is simple, it is a beginning of a process which we will assess in the next few months and decide whether we need other steps to stabilise and improve the market,” said Saudi minister, Ali al-Naimi said after the Doha meet which called for a joint action to help recover prices.
“We will start intensive communication almost straight away with other major producers, OPEC, non-OPEC, including Iran and Iraq,” al-Naimi added.
On Tuesday, oil prices rose to $35.55 per barrel after the news about the meeting but later it again dropped below $34 as expectations from of an immediate solution from the deal faded.
The Doha meeting came after more than 18 months of declining oil prices, knocking crude below $30 a barrel for the first time in over a decade.
Oil prices have tumbled about 70 per cent since June 2014, hit by oversupply, sluggish demand and worries about the global economic outlook.
The prices came under renewed pressure by the return of Iran to world markets after the lifting of international sanctions linked to its nuclear programme.
Organization of the Petroleum Exporting Countries (OPEC) is keen to arrive at a decision on how to prop up prices. Economies of Venezuela, Saudi Arabia and Russia have been hit with plummeting oil prices. While Venezuela has been the hardest-hit major producer, oil below $30 is a fraction of what Russia needs to balance its budget as it heads towards parliamentary elections this year. Saudi finances are also suffering badly, running a $98 billion budget deficit last year, which it seeks to trim this year.
(With inputs from agencies)