Iran’s oil minister said the country would defend its market share even in the face of intensifying competition in the global oil market, as the possibility of a lifting of sanctions gains momentum.
“Under no circumstance will we reduce our global market share, even by one barrel,” Bijan Zanganeh, said, according to the official Iranian news agency Irna.
His comments come after meetings in recent days with his counterparts in the UAE, Kuwait and Qatar, in preparation for the meeting of Opec oil ministers in Vienna next Thursday. The meeting is setting up to be a contentious one as oil prices have fallen dramatically since the middle of the year, when world benchmark North Sea Brent peaked at about US$115 a barrel.
On Thursday, Brent for January settlement fell as much as 54 cents to $77.56 a barrel and was later down 0.5 per cent at $78.10 a barrel on the London-based ICE Futures Europe exchange..
In the past two months, comments from Saudi Arabian officials, including the oil minister Ali Al Naimi, have indicated that the kingdom is not anxious to take action to try to curb the decline in oil prices. Saudi Arabia also increased the discount for oil offered to US customers, which was taken as a clear signal that it intends to defend its market share in major markets around the world rather than defend prices. It has also been assumed by the kingdom’s actions that its policymakers would be happy to see a period of lower oil prices to discourage investment in some of the higher-cost production, especially in North America, that has been a main source of oversupply in world markets.
This was tacitly accepted by Mr Zanganeh in his comments . “The countries in the south of the Gulf are interested in keeping their market share and a decrease in market share [by any Opec member] will be difficult,” he told Irna.
The UAE’s medium-term production plan is to increase output to 3.5 million barrels per day from 2.8 million.
The squeeze on oil prices has an uneven effect on Opec countries, with the Gulf producers, including Saudi Arabia and the UAE, having an economic cushion, with their national budgets based on oil prices lower than they are currently, plus massive surpluses built up over recent years. But countries including Iran are suffering from lower oil prices, and Iran has been squeezed by sanctions on its oil exports since 2012 because of its nuclear programme.
The Opec meeting falls just after the Monday deadline on talks that may result in a comprehensive agreement to limit Iran’s nuclear programme to non-military applications. Diplomats from Iran, the US and other major powers are also meeting in Vienna
If a deal were to be reached, the lifting of long-standing sanctions against Iran, which has kept about 1 million barrels per day of its oil off world oil markets since mid-2012, would add to Opec’s headaches.
Mr Zanganeh said Iran’s oil exports would double within two months of lifting the sanctions from levels under sanctions of about 1.3 million bpd, out of total production of 3.2 million bpd. But experts maintain that raising production will be problematic.
“There are two big questions that will need to be answered, if we assume that sanctions will be lifted,” said Paul Stevens, a fellow at the Royal Institute of International Affairs in London.
“How much damage has been done to the fields by closing them in during sanctions and suspending investment? And how will Iran attract the big international oil companies back in to invest a lot of money?”
amcauley@thenational.ae
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