Iran Says It can Boost Oil Output Just Days After Sanctions End

Iran’s Oil Minister Bijan Zanganeh said today in an interview with state TV that Iran can boost oil production “in one week” after international sanctions are lifted. He said production could increase by 500,000 bpd within a week after sanctions and by 1 million bpd within a month following that. Zanganeh warned that OPEC’s refusal to accommodate Iran in export markets would result in lower crude prices. (IRNA/Bloomberg, 2 August)

“Our lost share of market, which was about 1 million barrel a day, will manifest itself,” Zanganeh said. Even if crude prices fall, Iran’s (oil export) revenues will stay the same because exports are due to double, he added. (Shana/Bloomberg, 2 August)

Iran produced an average of 2.85 million barrels a day in July compared with 3.6 million at the end of 2011 when oil and banking sanctions went into effect. The Iranian oil exports declined to 1.4 million bpd after sanctions compared to 2.6 million bpd in 2011.

“Some of the most effective sanctions with regard to the oil industry were those targeted aspects such as sales, volumes, shipment, insurance and the transfer of the money,” Zanganeh said. “If those issues are resolved, Iran will regain the market share that it has lost which amounts to more than one million barrels a day.” (IRNA/Press TV, 2 August)

Amid surplus crude supply, the global benchmark Brent crude fell about 50 percent last year and dropped 2.1 percent on Friday to $52.21 a barrel on the London-based ICE Futures Europe exchange.

File photo: Iran’s Oil Minister Bijan Zanganeh (Atta Kenare/AFP/Getty Images/Bloomberg)

Oil Off 2015 Highs on Iraq Export Record

Iraq said today its crude oil exports hit a historic record in April, to 3.08 million bpd. OPEC supply in April also rose to its highest in more than two years at 31.04 million bpd, Reuters reported.  

The Brent crude oil for June delivery fell below 2015 highs and settled at $66.46 a barrel. Brent jumped 21 percent in April.

Iran, Iraq Follow Saudis in Fight for Asian Oil Market

Iran and Iraq cut prices for March crude oil deliveries to Asia to the lowest in more than a decade following Saudi Arabia’s move to reduce prices to the lowest in 14 years. Iraq’s Basrah Light will sell $4.10 a barrel below the benchmark used for Persian Gulf crude deliveries to Asia, the lowest since 2003. Iran’s NIOC lowered its official selling price for March to a discount of $2.10 a barrel, the lowest since 2000. (Washington Post/Gulf News, 15 February)

The price war signals the battle for a share of Asian markets, OPEC’s largest, for the Gulf producers.

“This is an effort by some producers to protect market share,” said Sarah Emerson, managing principal of U.S.-based ESAI Energy “It’s really straightforward; cutting prices is how you keep your foot in the door.” (Washington Post, 15 February)

Oil Falls: Worst Year Since 2008 Crisis

Brent at $57

Crude oil continued its fall, capping biggest annual decline since 2008 global financial crisis. U.S. shale oil producers and the OPEC are ceding no ground in the battle for market share amid a supply glut. West Texas Intermediate for February delivery closed at $53.27 a barrel and Brent crude at $57.33 in the last day of the year. This is a 46 percent drop in 2014.

File photo: Getty Images
   

Iran Wary of OPEC ‘Shock Therapy’ to Maintain Market Share

Iran’s Oil Minister Bijan Zanganeh said in Tehran today that the steep decline in oil prices is no solution for OPEC’s loss of market share to U.S. shale producers. Brent crude price fell to $70.15 a barrel on Saturday, a four-year low and a drop of 37 percent this year.

“High prices are a disadvantage to OPEC’s market share,” Zanganeh said. “If you want to increase your share, you have to reduce prices, but you can’t do it through ‘shock therapy’ over the course of three months if you want to change everything.” (Bloomberg, 30 November)

The so-called “shock therapy” to force shale producers out of business could indeed be a risky proposition. As there are different levels of fracking, the shale producers could adjust their exploitation methods based on the prevailing market conditions, at least in the near and mid term. There are also many leases that have been paid for that could likely run for another 15 years or so, and survive $40 oil. Besides, shale production is not limited to the U.S. and the Chinese could become a major player soon, adding more pressure on traditional oil producers in the Persian Gulf, which could be facing a precarious situation: lower prices could become a new normal, while market shares could decline at the same time.

Photo credit: Getty Images

Oil Drops as OPEC Maintains Current Poduction Ceiling

Oil slid to a four-year low after OPEC kept its oil production unchanged at today’s meeting, maintaining its collective ceiling of 30 million barrels a day. West Texas Intermediate crude tumbled nearly 5 percent to $69.19 a barrel, and Brent crude fell to $72.74.

Oil markets were hoping for a major production cut to support the falling oil prices. Saudi Arabia, the de-facto leader of OPEC, along with all Persian Gulf producers, stopped a proposal to drastically cut the output, supported by Venezuela, with strong political backing of giant non-member producer Russia. Iran apparently wanted OPEC to cut output, but not its own production levels.

Photo: OPEC flag in the center, surrounded by the flags of its 12 member states.

OPEC Meeting in Vienna

Brent Falls to $75.77

OPEC producers are meeting today in Vienna amid plunging oil prices. Brent crude was traded at $75.77 on Thursday morning. The outcome of the meeting remained unclear. Saudi Arabia, the de-facto leader of the group, is discouraging any output cut to stop the fall in prices. Some members, like Venezuela, were pushing drastic action to reduce the excess supply in global oil markets.

Photo credit: OPEC’s oil ministers meeting at the organization’s HQ in Vienna, 27 November 2014 (AP)

OPEC Divided Over Plunging Oil Price - UPDATE

OPEC producers will meet on Thursday in Vienna to discuss production target amid the collapse of crude oil prices. Brent futures traded at $77 a barrel today. The 12-member OPEC pumps about 40 percent of the world’s oil, but its members were divided over cutting the production to support the price of oil.

Iran and Saudi Arabia were opposed to production cut, while Russia and Venezuela were pushing to curb output. Saudi Arabia Oil Minister Ali Al-Naimi said in Vienna today that tumbling crude prices will stabilize. Iran’s Oil Minister Bijan Zanganeh said before a meeting with his Saudi counterpart in Vienna that Iran, OPEC’s fifth-largest producer, will neither cut its oil production nor ask Saudi Arabia to do so. Russia and Venezuela have asked OPEC to lower its official production target of 30 million barrels a day.

UPDATE: GCC has reached a consensus not to cut oil output when OPEC meets on Thursday in Vienna. Saudi Oil Minister Ali al-Naimi announced the unified decision today.  

File photo: Iran’s oil export terminal at Kharq Island (Getty)

Iraq Follow Saudi, Iranian Price Cuts

As Brent Oil Falls

 

Iraq will sell Basra Light crude to Asia at the biggest discount since January 2009. It joined Iran in following Saudi Arabia’s lead to significantly lower export prices. The scale of November’s cut could be the start of a price war among Persian Gulf producers.

Iraq set the Basra Light at $3.50 below the average of Oman and Dubai prices, the Gulf benchmark. State-run National Iranian Oil Company has also cut its selling prices to its Asian customers at the biggest discount in almost six years, matching Saudi Arabia.

Brent crude fell another 2 percent in London today to $88.83 a barrel for November delivery, as demand slows globally and output expands in the U.S. and Russia.

The American output increased to 8.8 million barrels a day in the week ended 3 October, the most since 1986. Russia boosted its output to 10.61 million barrels a day.

File photo: Iran’s oil export terminal at Kharq (Getty Images)

Iran Calls on OPEC to Stop Decline in Oil Prices

Iranian Oil Minister Bijan Zanganeh issued call to OPEC to work to stem the decline in global oil prices. Overall prices have seen steady decline lately and generally remained below $100 per barrel threshold.

“Given the downward trend of the oil prices, OPEC members should make efforts to offset their production to keep the prices from further instability,” Zanganeh said in a statement issued at OPEC. (UPI, 26 September)

The decline of prices below the $100 mark creates serious budgetary shortfall for Iran. The country exports oil at volumes nearly half its pre-sanctions levels, and is involved in two costly wars in Iraq and Syria.     

File photo: Iranian oil export terminal at Kharq Island (Getty Images)

Iraq PM in Tehran

Iraqi Prime Minister Nuri al-Maliki arrived in Tehran today for two days of talks with senior Iranian officials. It is Maliki's first visit to Tehran since Rouhani became president.

Maliki’s spokesman, Ali Mussawi, told reporters in Baghdad before departing for Tehran that the talks would focus on energy cooperation between the two countries. (AFP, 5 December)

However, it is expected that the Syrian conflict to top the agenda. Iran is a key ally of Assad’s regime, and Iraqi Shia militant groups are fighting under the Iranian direction in Syria. Iran is also using the Iraqi airspace to supply arms to the Syrians. But the Syrian conflict has spilled over into Iraq, with the country suffering from a surge in terrorist attacks by the Islamic State of Iraq and the Levant (ISIL), an Al-Qaeda affiliate heavily involved in Syrian conflict.

Also expected to be discussed is the status of MKO militants at Camp Liberty near Baghdad. In September, during a terrorist attack on Camp Ashraf, more than 50 unarmed members of the organization were killed. The Iraqi government has not yet identified the group behind the killings, but Iran is suspected to have ordered the attack. 

Iran’s official news agency IRNA reported that Maliki was to meet Supreme leader Ayatollah Ali Khamenei, President Rouhani, parliament speaker Ali Larijani, and Foreign Minister Javad Zarif during his stay in Tehran.

Maliki is also scheduled to visit Mashhad, a Shiite pilgrimage city in the northeast Iran.

Meanwhile, Iran and Iraq were at odds today at OPEC, with both fiercely backing their respective candidates to become the next secretary general of the organization. Today’s meeting in Vienna ended with neither of the candidates able to muster the majority vote.

Photo credit: Iraqi prime Minister Nuri al-Maliki (L) with Iran’s First VP Eshaq Jahangiri at a news conference at Assadabad Palace in Tehran. 4 December 2013. (IRIB)

Iran Needs Higher Oil Price for 2013 Budget - Report

Iran needs the highest oil price among OPEC members to balance its 2013 budget, the Arab Petroleum Investments Corp., known as Apicorp, said today. Iran requires an average crude price of $144 a barrel this year to break even. (Bloomberg, 27 July)

Iran is now at last place among the six Persian Gulf oil exporters. The oil sanctions has pushed Iranian exports to below 1.5 million barrels a day, hence the need to get more per barrel to balance its budget.

Saudi Arabia needs $98 to balance its budget. Not surprisingly, Saudi Oil Minister Ali al-Naimi said on May 31 in Vienna that Brent at about $100 is a fair price.

OPEC to Meet Amid U.S. Crude Surge and Iran-Saudi Tensions

OPEC members will meet on Friday to discuss how much crude to pump amid the surge in crude production in the United States, its traditional main market. There are concerns that the U.S. crude surge will reduce global dependency on OPEC’s products. But the group’s 12 oil ministers are expected to stick to the organization's present output target of 30 million barrels a day. (AP, 30 May)

A rivalry between Iran and Saudi Arabia is also adding to the challenges facing OPEC, denting its image as a unified controller of oil prices and supply.