Iran Supports Oil Freeze, But Doesn't Commit to Deal

File image courtesy NIOC / Abdoulreza Mohseni

By MarEx 2016-02-17 20:41:35

Iranian Minister of Petroleum Bijan Zangeneh told Iran's Shana news agency on Wednesday that Tehran would support foreign production controls to stabilize crude prices. However, notably, Zangeneh did not make any commitment to freeze Iranian production. In prior announcements, ministry officials have said that they intend to ramp up crude output to pre-sanctions levels, with a planned increase of as much as a million barrels a day within months.

A recently announced agreement between Russia and OPEC hinges on Iranian cooperation with a production freeze. 

Zangeneh's comments followed a meeting Wednesday with the oil ministers of OPEC members Iraq, Venezuela and Qatar. He said that the talks between Russia and OPEC at Doha had been discussed, and that Iran welcomes “cooperation between OPEC and non-OPEC [producers].”

“The decision taken so that OPEC members and non-OPEC [countries] freeze their production ceiling in a bid to stabilize the market and improve prices in the interest of consumer and producer is also supported by us,” he said. “But I think everybody agrees that we have to monitor the market situation and reaction and to consult on the next steps if necessary.”

“As I was told, Russia . . . Oman and other countries have expressed their joining up which is a positive move and we approach it in a positive way. This is good start.”

Zangeneh said that he had also talked with the visiting ministers about Iran's return to the market and its export levels. Iran has previously stated that it wishes to regain its “quota” of the world oil market, which has been filled in part by Saudi exports since the imposition of sanctions four years ago. “We discussed about this issue with the Iraqi, Qatari and Venezuelan ministers of oil and energy and they viewed the reality with a logical view,” he said.

Zanganeh spent around two hours in the meeting. The visitors, who flew from Doha, where the output deal between OPEC and Russia was clinched on Tuesday, left the Tehran meeting without comment.

Separately, Iranian banks have regained access to the global banking network SWIFT after a four-year absence imposed by western nuclear sanctions. The renewal is expected to give Iranian businesses easier access to European markets. The system is used to transmit payments and letters of credit and Iran's exclusion damaged its ability to conduct foreign trade and money transfers.

"[We have] completed the on-boarding process for these banks and can confirm that they have now been reconnected," said Onur Ozan, a country manager at SWIFT.

The access may help Iran in its efforts to boost oil sales to the E.U. Oil traders have said a slow pick up in exports was partially due to SWIFT problems. "Nobody could pay the Iranians via normal lines, not even in euros," one veteran oil trader based in Europe said, adding that after the reconnection he expected normal banking business to resume.