Iran supports oil production ‘ceiling’

Iranian oil minister Bijan Zanganeh has said that he supports the decision by oil producers to keep a “ceiling” on production following a meeting in Tehran yesterday.

Oil officials from Iran, Iraq and Venezuela met in the Iranian capital on Wednesday to discuss a production freeze agreed between Russia and Saudi Arabia in Doha the previous day.

Qatar, Venezuela and Kuwait said they would also freeze output.

“The decision that was taken for the OPEC and non-OPEC members to keep their production ceiling to stabilise the market and prices for the benefit of producers and consumers, is supported by us,” Zanganeh told Shana News Agency.

However, his comments did not explicitly mention that Iran would support the deal by keeping its own output at January levels.

Iranian first vice president Eshaq Jahangiri said this week that the country planned to increase its oil exports from 1.3 million barrels per day to 2 million bpd in the next few months.

Comments from Iranian Oil Terminals Company managing director Seyed Pirouz Mousavi by Tasnim News Agency yesterday said the country exported more than 7.1 million barrels of oil in 48 hours, a new record.

It is estimated that the country is as much as 1 million bpd below its pre-sanctions peak.

Many, including Goldman Sachs and BNP Paribas, have expressed doubts that freezing production would succeed in tackling the global oil glut. Oil production at both OPEC leader Saudi Arabia and major producer Russia is already at an all time high.

“Not only has production been frozen at January 2016 record levels, which will have a minuscule impact on the excessive oversupply, the meaningless freeze is only valid on the premise of other producers joining in,” said ForexTime research analyst Lukman Otunuga yesterday.

Following Wednesday’s meeting, Brent crude rose 5.7 per cent to $34.03 a barrel, although prices still remained around 70 per cent below their 2014 peak.