Iranian oil minister Bijan Zanganeh said Thursday that Tehran's full return to international oil markets after the expected lifting of sanctions was not negotiable and that OPEC countries that had increased production over the past year were responsible for the 60% drop in oil prices.
Zanganeh was responding to an Energy Intelligence report citing a senior OPEC delegate as saying that Saudi Arabia was readying a proposal for an eventual 1 million b/d OPEC output cut in which Iran, whose crude exports have been slashed by tightened sanctions imposed in mid-2012, would be expected to participate.
The report has since been rebutted by a Saudi source, who said it was "baseless."
"We don't see our production increase and return to the previous level in the market and our global supply as negotiable at all," Zanganeh said on arrival in Vienna for OPEC talks on Friday, when the group will review output policy.
"We don't accept any discussion about the increase of production after the lifting of the sanctions. It is our right and no-one can limit us to do so. We will not accept anything in this regard," he said. "We don't expect our colleagues in OPEC to put pressure on us to continue sanctions against Iran. It is not acceptable and it's not fair."
"We have no responsibility for the situation that is in the market and the level of the price," he said. "The price dropped 60% during in the past year. Iran has no responsibility in this drop and this is the responsibility of the OPEC member producers and others who have produced more than the approved ceiling, instead of [not] Iran."
"It is not a matter of discussion with anyone to limit the level of the production of Iran."
NOT RATIONAL
Zanganeh said it was "not rational" for OPEC to base its decisions on what non-OPEC producers might be prepared to do.
"It is not a rational way, to hold our decisions subject to the reaction of non-OPEC producers," he said. "We as OPEC are trying to have a contribution from non-OPEC members, but it doesn't mean we can subject our decision to their contributions."
He reiterated that Iran would proceed with its plan to boost output by 500,000 b/d immediately upon the lifting of sanctions, which he said would be early next year.
"As we have said before, we are capable of increasing our production at least 0.5 million b/d after lifting the sanctions and very soon after this first jump we can reach 1 million b/d," he said. "And, totally, it means we will be close to 3.8 million-3.9 million b/d total production of Iran," Zanganeh said.
The minister added that he was coming into Friday's OPEC meeting with no proposal in hand on output strategy, and he said that only after Iran fully returns to the global market would it agree to discuss new output ceilings or individual country quotas within OPEC.
"I am coming here to discuss with other OPEC members and to find a solution if we can," he said.
Zanganeh said world oil markets were oversupplied to the tune of 1.5 million-2 million b/d.
"It's clear [that's how much oversupply is in the market], but some of the members believe that now is not the time [to cut]," he said, without naming any countries. "We need to react. They believe it's better we leave the oil price to the market."
Iran, he said, "will come to any proposal which wants to make a balance between demand and supply in the market."
MARKET SHARE
A year ago, Saudi Arabia persuaded OPEC not to cut output in the hope of shoring up plunging oil prices but to defend its market share against climbing non-OPEC production. Despite the misgivings of some members, OPEC agreed then to maintain the 30 million b/d output ceiling that had been in place since January 2012.
OPEC production since climbed to levels in excess of 31 million b/d. Saudi Arabia, according to its own official figures, boosted output by close to 1 million b/d between November last year and June 2015, when it told OPEC it pumped a record 10.56 million b/d.
The steep fall in prices -- from the $115/b traded for Brent in mid-June last year to current levels of around $44/b -- has caused pain even to Saudi Arabia, which has been drawing down its financial reserves in order to maintain social and infrastructure spending.
Riyadh has said it is willing to work with producers inside and outside OPEC to stabilize oil markets but is not prepared to cut output unilaterally.
Venezuela wants OPEC to agree a 5% production cut in which there would also be participation by some non-OPEC producers.
Ecuador has also called for a cut of close to 2%.
Iran, which has said it will proceed with its output increase plans regardless of whether oil prices fall further, has written to OPEC calling on the group to consider these additional barrels when making decisions on output policy.
