Iran won’t slow production to help raise oil prices

Iran and oil production

Iran on Wednesday said it would not restrain oil output as part of a global pact to freeze production and help prop up oil prices.

The country’s officials are focused on recapturing the market share that was lost after years of US sanctions.

Non-OPEC Russia and OPEC leader Saudi Arabia, have been in talks to freeze output at January levels.

The promise to freeze global production at current levels has done little to impress the market, which expected a production cut.

“This is the first step and other steps should also be taken. This cooperation between OPEC and non-OPEC members to stabalise the market is good news. We support any effort to stabilise the market and prices,” Iranian oil minister Bijan Zanganeh said, according to the Shana news agency.

Speaking to Iranian media after a meeting with world oil officials, Zangahen said, “We had a good meeting today and the report of yesterday’s meeting was given to us. We support cooperation between OPEC and non-OPEC members.”

“I was told that Russia as the world’s biggest oil producer, Oman and other countries are ready to join. This is a positive step, we have a positive approach to it, this is a good start,” he added.

OPEC Gulf producers Qatar, Kuwait and the UAE, as well as Venezuela said they would join the Russian-Saudi pact, aimed at tackling a growing oversupply and helping prices recover from their lowest in over a decade.

If completed it would be the first joint OPEC and non-OPEC deal since 2001.

“Asking Iran to freeze its oil production level is illogical … when Iran was under sanctions, some countries raised their output and they caused the drop in oil prices.” Iran’s OPEC envoy, Mehdi Asali, told the Shargh daily newspaper before talks started on Wednesday.

Iran exported around 2.5 million barrels per day of crude before 2012. That number was cut to 1.1 billion barrels per day when sanctions were imposed.

Tehran has pledged to raise supply by about 1 million barrels per day in the next 6-12 months and on Wednesday some Iranian banks were reconnected to the SWIFT global transaction network.

Written by Lane Hanson

Lane Hanson is BusinessPundit's Economy Editor. He reports on major changes in the US and Global Economies.