Under increasing pressure from US sanctions, Iran is fighting a Russian and Saudi plan to raise oil output through the Organization of Petroleum Exporting Countries.
A rise in OPEC production would assist the American plan to restrict Iran’s exports, vital to the stability of the Islamic Republic’s economy.
Oil Minister Bijan Zanganeh (pictured) told reporters after arriving in Vienna for Friday’s OPEC summit, followed by talks the next day with Russia and other non-OPEC producers, “I don’t believe at this meeting we can reach agreement.”
Moscow and Riyadh have proposed reversing most of OPEC’s 2016 cut of 1.8 million barrels per day, adopted amid sustained low global prices, to cover any spike as Iran’s exports are constricted.
Analysts have estimated that Iran could lose up to 40% of its exports of 2.5 million bpd, as shippers pull back and insurers refuse to provide cover because of threats of US financial penalties. In the first two weeks of June, Iran’s sales fell 16% from the previous month to just over 2.1 million bpd.
Zanganeh said Tuesday that Donald Trump has “created difficulty for the oil market”:
And now he expects OPEC to change something for better prices. That is not fair. OPEC is an independent organization, not an organization to receive instruction from President Trump….OPEC is not part of the Department of Energy of the United States.
After a lengthy period at or below $50 per barrier, premium crude prices have risen to almost $80 since the production cut in late 2016.
Zanganeh said he will attend Friday’s summit but will leave before Saturday’s talks with Russia.
Russian Energy Minister Alexander Novak said Tuesday that the need for increased output is urgent during a summer rise in demand, “We could face a deficit if we don’t take measures. In our view, this could lead to market overheating.”
Russia has warned that limits on supply could encourage increased production from shale oil producers in the US.