Oil officials from Iran, Iraq and Venezuela will convene in Tehran today for a meeting that could decide the fate of an agreement to freeze production.
OPEC leader Saudi Arabia and major exporter Russia agreed to freeze production at January levels in Doha on Tuesday but said the deal was dependent on other exporters’ participation.
Qatar, Venezuela and Kuwait said they would also freeze output and sources in Iraq have said the country will abide by a global deal to help prices recover, according to Reuters.
A senior official at National Iranian Oil Company confirmed that a follow up meeting would take place today in the capital.
“Tomorrow, a meeting between Venezuela, Iraq and Iran will be held in Tehran,” the company’s deputy managing director for international affairs Seyed Mohsen Qamsari told Russian news agency Sputnik yesterday.
Iran’s is unlikely to agree to any production freeze having been frozen out of the market for years prior to the lifting of nuclear-related sanctions by world powers in January 2016.
The country is reportedly at least 1 million barrels per day below its capacity at pre-sanction levels. In comparison, Russian and Saudi output is at record highs.
“The obstacles for the pending production freeze are noticeably overwhelming as Iran remains on a quest to reclaim lost market share, while Iraq’s production continues to soar as it incessantly pumps to generate revenue to recover from years of conflict,” said FXTM Research Analyst Lukman Otunuga. “WTI Oil is heavily bearish on the daily timeframe and a solid breach below $29 may open a path to $25 and $20 respectively, a level which may leave all producers under immense pressure to move forward with a real production cut.“
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.
“Our situation is totally different to those countries that have been producing at high levels for the past few years,” a source ‘familiar with Iran’s thinking’ told Reuters.
Iranian oil minister Bijan Zanganeh rejected any plan to curtail Iran’s production before it reached pre-sanction levels at an OPEC meeting in December.
Brent oil prices fell 2 per cent on Tuesday to below $33 a barrel on concerns that Iran may reject the deal.