VIENNA: Iran and Iraq yesterday put Opec on notice of substantial oil output increases to come, saying others in the producer cartel will need to give way to make room for them.
Speaking ahead of an Opec meeting, oil ministers for the two countries — rivals as the group’s second and third biggest producers after Saudi Arabia — said they were targeting 4 million barrels a day, growth of about 1m b/d apiece.
Neither country can expect to reach those goals any time soon, but both are keen to prepare the ground for special treatment should the Organisation of the Petroleum Exporting Countries need next year to negotiate a deal to curb supplies to keep oil prices above its favoured $100 a barrel.
Neither can raise output quickly enough to make waves at today’s Opec meeting — ministers confidently predict no change in the group’s production cap of 30m b/d. A senior Gulf delegate said next June’s meeting might require Opec to consider supply cuts. More oil from Iran and Iraq, a recovery in output from fellow Opec member Libya and fast-rising US shale oil could tip the balance.
Iranian Oil Minister Bijan Zanganeh said Iran will take six months after sanctions are lifted to return to full oil output capacity of 4m b/d.
Zanganeh was reappointed by Iran’s new reformist President Hassan Rouhani and will be responsible for rebuilding Iran’s oil industry should Washington and Brussels lift sanctions in six months as part of a deal on Iran’s nuclear programme.
“In Zanganeh’s favour, he’s the one oil minister in Iran’s post-revolutionary period to have a positive impact on increasing production capacity and took it above 4 million for a period of time. He has form,” said Farren-Price. Iranian oilfields had not suffered technically as a result of the sanctions which have seen Iranian oil output fall by a million barrels per day to less than three million bpd, Zanganeh said.
Asked whether he expected others in Opec to make room for Iran’s return he said: “This is the tradition. When a member country after some difficulties returns to the market, other members accept to make room for them.” “The member countries who produced more during the past years. I think they will understand they should make room for Iran.”
Both Saudi Arabia and Iraq have raised output in the past two years since sanctions were imposed on Tehran but Baghdad will argue that it should be a special case given many years lost to sanctions.
Zanganeh said he hoped Iran would lift exports in 2014 from current levels of around 1.2m b/d.
But Tehran is not betting on making much headway next year. Rouhani’s first draft budget for 2014 estimates oil exports at 1.1m b/d, Iranian oil ministry website Shana said, indicating Tehran sees no major recovery in sales next year.
Rouhani is scheduled to present the draft budget for the next Iranian year — beginning March 21 — to parliament today.
Iraq reckons it can hit 4m b/d next year in what would be the country’s biggest annual oil supply increase since the fall of Saddam a decade ago. Iraqi Oil Minister Abdul Kareem Luaibi said Baghdad planned to lift exports to 3.4 million barrels daily, including 400,000 b/d from the semi-autonomous Kurdistan regional government KRG). With domestic consumption running at about 700,000 b/d that would take total Iraqi supply above 4m b/d, up from just below 3m b/d now.