Iran Hoping for Relief from OPEC amid Declining Oil Prices
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The Organization of Petroleum Exporting Countries has pretty much confirmed that it has no immediate plans of cutting its output target for crude oil. This is partly because they have to challenge the oil shale producers in America who are shaking up the industry.
According to a statement released by Iran’s oil minister, Bijan Namdar Zanganeh, the country is apparently strong enough to weather an even deeper slump in oil prices even if the country has to sell its oil at $25 a barrel.
The Organization of Petroleum Exporting Countries has pretty much confirmed that it has no immediate plans of cutting its output target for crude oil. This is partly because they have to challenge the oil shale producers in America who are shaking up the industry.
According to a statement released by Iran’s oil minister, Bijan Namdar Zanganeh, the country is apparently strong enough to weather an even deeper slump in oil prices even if the country has to sell its oil at $25 a barrel.
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A Snapshot of the Current Oil Economics in and around OPEC
According to the state-run Fars news media agency, Zanganeh told reporters at a recent conference in Tehran that even if oil prices dropped to $25 a barrel, there will be no imminent threat posed to Iran’s oil industry.
On January 19, Brent crude traded below $49 in London. Crude-oil prices have fallen more than 30% since OPEC November decision to keep its output unchanged at 30 million barrels a day. Iran does not expect OPEC to hold any emergency meetings. Another statement by Zanganeh has mentioned that the group’s next meeting is June 5, 2015.
Iran, along with Venezuela, another major oil exporter, has called for OPEC to work in tandem to support a proposed recovery in crude-oil prices. OPEC, which supplies more than 40% of the world’s oil, is a major influence for the future of crude oil. The recent US shale boom, as already mentioned, has also contributed to this global surplus, and countries like Qatar and the United Arab Emirates have estimated this oversupply is in excess of 2 million barrels a day. Iran, on the other hand, has been restricted by various international sanctions over its alleged nuclear weapons program and has been struggling for market share ever since.
Brent crude, the benchmark for more than half of the world’s oil supply, slipped more than 15% in Dec-Jan, and was 39 cents lower at $48.54 a barrel last week. Oil fell by more than 50% last year, the most since the 2008 global recession.
Is OPEC Standing on Oily Grounds?
Zanganeh had said that Iran is in negotiations with its fellow OPEC members in order to respond to the global oil collapse, but did not provide any details of the same. As of now, OPEC has not come to a decision regarding a reduction in its production outputs.
Ali al-Naimi, Saudi Arabia’s oil minister, arrogantly remarked that the excessive supply issue would remain irrelevant to the nation even if crude price dipped as low as $20 a barrel. The United Arab Emirates Energy Minister, Suhail Al-Mazrouei, stated in an interview last week that sustainable development within the petroleum industry could not happen at the prevailing prices.
Iran is Desperate
Iran has decided to lower its projected crude price for this year’s budget from $72 to a revised $40 a barrel, as reported by Fars. The Gulf nation pumped approximately 2.8 million barrels of oil every day in December 2014, which is lower than the 2011 average of 3.6 million. Zanganeh further stated that OPEC members and non-OPEC producers ought to cooperate with each other if they wished to generate investment in the oil industry.
