The global energy market needs higher oil supply from Iran and as a major producer of oil, gas and petroleum products, the country is ready to play its role in providing oil and gas away from politics, the oil minister said on Monday.
Javad Owji made the statement after the 32nd meeting of the Organization of Petroleum Exporting Countries and its allies, known as OPEC+, which was held via videoconference, the Oil Ministry’s news agency Shana reported.
“Iran can play a major role in supplying energy resources and ensuring the stability and security of the world's energy, which issue has been acknowledged by oil and energy market players as well as the policymakers of consuming countries,” he added.
Stressing that the global energy crisis is intensifying, especially in the European region, Owji noted that an example is the increase in the price of natural gas in some European gas hubs to about $70 per million BTU which is equivalent to the oil price of more than $400 per barrel.
“Although Europeans are trying to compensate for the lack of energy and reduce the severity of the crisis, the stable and reliable supply of energy sources, specifically oil and gas, especially as the fall and winter seasons are approaching, is a necessity for European consumers,” he said.
“It is a fact that the rise in natural gas price in the European market leads consumers to consume more oil and oil products, and a significant increase in demand for oil and oil products in the green continent is likely.”
Ready to Boost Export
Owji has earlier said Tehran is ready to increase oil exports by a significant amount, when sanctions are removed.
According to the official, Iran will be able to immediately return to an oil export figure of nearly 2.8 million barrels per day that was seen before US sanctions were imposed on the country in 2018.
The country’s monthly oil export in recent months has been over 1 million bpd, although it is still under tough sanctions imposed by the US.
With the efforts of all industry players, oil production has not been halted even for a day in the past four years when the country was hit by a new round of sanctions.
He expressed hope that Western governments would adopt a more logical approach in dealing with the oil issue, as higher oil and gas supplies from Iran would help restore balance and calm to the global markets.
Regarding the OPEC+ role in the market, Owji said that according to the studies, OPEC+ decisions have helped improve the conditions of oil market in terms of supply and demand balance.
“However, under the current circumstances, as a result of some concerns about the consequences of geopolitical tensions for the world's economic growth and possible demand destruction. The global oil market is in a fragile state and the proof of this is the high volatility of crude oil prices in recent months, which should be taken into account,” he added.
OPEC+ Agrees on Small Cut
The 23 member countries of OPEC+ in their 32nd meeting decided to cut oil output in October.
OPEC and its allies led by Russia agreed to a small oil production cut to strengthen oil prices that have slid on fears of an economic slowdown.
The world’s most powerful oil producers have decided to slash output by 100,000 barrels per day amounting to only 0.1% of global demand, in October. Iran has been exempted from reducing oil production as in the past.
They also agreed that OPEC’s leader Saudi Arabia could call an extraordinary meeting anytime, if volatility persists.
OPEC’s decision comes amid the energy crisis in Europe, which is concerned about the prospect of recession and a winter gas shortage.
The output cuts came as a surprise for many traders, who had expected the OPEC group to hold production steady as oil prices above $90 a barrel squeeze consumers. The market also looks set to get tighter in the coming months, as the EU imposes sanctions on Russian exports.
Last month, OPEC+ agreed to raise oil output by only 100,000 barrels per day, which experts said was a rebuff to US President Joe Biden after his visit to Saudi Arabia to ask OPEC’s largest producer to pump more to cool prices and help the global economy.
OPEC+ said in a statement that Monday’s decision to revert back to August levels of production was because the upward adjustment was “intended only for the month of September”.
In response to the collapse of demand at the height of the Covid-19 crisis, OPEC+ limited its production in May 2020 by 9.7 million bpd, equivalent to about 10% of global demand, but later, demand improved and the group gradually eased supply constraints. The amount of constrained supply (9.7 million bpd) has reached the end of the line on paper, but not all of it has entered the market.
The members of the coalition have decided to hold the 33rd OPEC+ joint meeting on Oct. 5.
