LONDON: Iran, in a change of tack, is saying it can live with lower oil prices, moving closer to the views of Saudi Arabia and other Gulf Opec members and reducing the likelihood of any collective cut in Opec output to support prices.
Opec’s traditionally second-largest producer is normally among the first members of the Opec to call for supply cuts to support prices. Iran needs relatively high oil prices to balance its budget, analysts say.
“At this time of year, it is normal to have some price weakness,” a source familiar with Iran’s oil policy said.
“And oil-price weakness has been compensated for by the appreciation of the dollar.”
Opec’s Gulf Arab producers are at ease with lower prices. Saudi Arabia has been quietly telling market participants it is comfortable with lower oil prices, a shift in policy that may be aimed at slowing the expansion of rival producers including those riding the US shale oil boom.
Another core Gulf Opec producer, Kuwait, said on Sunday Opec was unlikely to cut production.
Western sanctions have drastically reduced Iranian oil output and exports and have limited its ability to participate in output cuts at a time when Tehran’s energy-dependent economy is suffering from much lower oil revenues.
Reuters
