Iran is assessing a proposal for a collective OPEC output cut, but hasn’t announced any commitment to reduce its own production as the group tries to end disagreements about how to share the burden of supply cuts ahead of a meeting in Vienna.
Algerian Energy Minister Noureddine Boutarfa presented a proposal for an OPEC cut of 1.1 million barrels a day during a meeting with his Iranian counterpart Bijan Namdar Zanganeh in Tehran on Saturday, according to an Iranian oil ministry official. OPEC is also proposing a 600,000 barrel a day output cut by non-OPEC producers, the official said.
The two ministers discussed each country’s share of the proposed cut and Zanganeh said Iran will assess the proposal and discuss it further at the Vienna meeting on Nov. 30, the official said. Zanganeh, who didn’t comment on Iran’s position about cutting its own production, expressed optimism about the OPEC meeting next week, the official said.
The OPEC talks indicate that the group “can arrive at a lasting agreement on its output and market management,” Zanganeh said after the meeting, according to the Oil Ministry’s official news service, Shana. “If we reach an agreement, I am optimistic that prices will rise and the global economy requires such conditions.”
Boutarfa, the architect of the Algiers crude supply agreement in September, is on a shuttle diplomacy mission to try to resolve differences blocking the OPEC deal, particularly the question of whether Iran and Iraq are willing to cut production. He is also due to meet with the Iraqi oil minister next week.
An oil production cut would help the oil price to rise to $55-$60 a barrel, Boutarfa said, according to the Iranian oil ministry official. If no agreement is reached in Vienna next week, the price may remain under $50 a barrel, he said.
All OPEC members accepted the decisions adopted in Algiers, which proposed that the group’s production be reduced to a range of 32.5 million barrels a day and 33 million barrels, Zanganeh said, according to Shana. “Right now the debate revolves around how to divide” the production cuts, he said.
In a surprise move, Saudi Arabia pulled out of talks planned for Monday with non-OPEC producers including Russia because it wants to secure an OPEC deal first. The meeting was later canceled and OPEC members called instead for internal talks to try to resolve their own differences ahead of the ministerial meeting on Nov. 30.
The setback suggests that Saudi Arabia remains split from its two biggest Middle Eastern rivals at the Organization of Petroleum Exporting Countries. Iran insists it should be allowed to restore output to pre-sanctions levels, while it remains unclear if Iraq is still disputing the OPEC supply estimates that would provide the basis for any cuts. With less than a week until the crucial ministerial meeting, the refusal of just one major producer to participate could scuttle the whole of the agreement reached in September in Algiers.