Iran's ability to abide by the rules will determine future of oil deal
Members of Opec have met on the sidelines of the International Energy Forum (IEF) in Algeria to forge a deal on limiting oil output.
But prospects for any lasting deal look dim, with Iran still ramping up its production to the levels before the imposition of the western sanctions in 2012.
Writing in the pan-Arab daily paper Al Hayat before the conlusion of the meeting, the Iraqi columnist Walid Khadouri tackled the challenges that stood in Opec’s way.
“Some of its members have increased their output at a time of an oil glut.
“For instance, Saudi Arabia and Iran have ramped up their production by roughly one million barrels per day each as oil prices started to plummet in the second half of 2014 – not to mention Iraq’s increased production by one million barrels per day to reach 4.7million bpd,” he commented.
The writer attributed this increase to a number of reasons, mainly the efforts exerted by some countries to maintain their shares and the commitment of others to international companies operating on their territory to develop their fields.
“Iran is trying to make up for the production it has missed out on under the western sanctions. At the beginning of the year, the country had demanded to return to its pre-sanction output,” he noted.
Following this first demand, Iran’s stance has changed and so have its demands. It is now demanding 15 per cent of the organisation’s total output as well as an exemption from the decision to freeze the output at the meeting in Algeria.
Early in the week, both the Algerian and Venezuelan energy ministers expressed their resentment over Iran’s decision, but to no avail. For its part, Russia saw in Iran’s new demand an excuse to dodge support for Opec.
Also writing in Al Hayat, the columnist Randa Takieddine said Qatari energy minister and conference president Mohammed Saleh Al Sada would have reached the decision to freeze the output for one year starting in October earlier in the week had it not been for the draconian conditions imposed by Iran.
“Saudi Arabia had agreed to reduce its production to 10.1million bpd to curb the glut in oil stocks and improve oil prices, both for its sake and that of other oil producers,” Takieddine noted.
“The offer presented by Saudi Arabia to Iran in Vienna is founded on the latter’s actual production, but Iran insists on claiming a share of 4.1m bpd whereas its current production does not exceed 3.6m bpd and cannot be increased to 4.1m bpd before quite some time as its outdated oilfields need much investment,” the writer said.
According to Takieddine, Iran’s aim is to politicise the matter, to raise oil prices and to contribute to restoring the balance on the oil market by eliminating the surplus and reducing oil stocks.
Takieddine saw Opec’s meeting in Algeria as a chance for oil producers to improve their returns, which they all need – some more than others.
“Nigeria, Algeria, Venezuela, Iran, Libya and Iraq are suffering greatly from the falling prices, while the Gulf states and Saudi Arabia can hold on longer than other countries,” she noted.
“But everyone is hoping for a balanced market and reasonable prices.”
Translated by Jennifer Attieh
Published: September 29, 2016 04:00 AM