Low Oil Prices Harming Producers, Market Stability

Low Oil Prices Harming Producers, Market Stability
Low Oil Prices Harming Producers, Market Stability

The present oil prices are against the interests of oil producing countries and the stability of global oil market, President Hassan Rouhani said after a meeting held with Venezuelan Oil Minister, Asdrubal Chavez, and Foreign Minister Delcy Rodriguez in Tehran, during which Iran reiterated its support for Venezuela's oil policy.

Rouhani expressed hope that the joint efforts of the oil exporting countries will continue and help restore stability in the market, "to the benefit of all."

A Venezuelan delegation arrived in Tehran on Monday to pay an unannounced visit. The cornerstone of the meetings revolves around declining oil prices, which has distressed both countries' economies over the past months.

Venezuelan officials presented a report to their Iranian counterparts about the measures taken by the OPEC-member country to help improve oil prices and win cooperation of non-OPEC exporters, IRNA reported.

The talks offer a new perspective on Venezuela's engagement within the Organization of the Petroleum Exporting Countries (OPEC). After failing to persuade the organization to cut output last November, Caracas has toned down public efforts to cajole powerful Gulf producers into shoring up prices.

Iran expressed gratitude and support for the measures taken by Venezuela, underlining the necessity of a joint action to rebalance the oil market regardless of political intentions.

Global oil prices have tumbled more than 50 percent since June, hitting near six-year lows as growing production and tepid global demand has caused a supply glut and prompted oil producers to scale back spending.

Making reference to some countries' role in the declining oil prices, Foreign Minister Mohammad Javad Zarif, told the delegation that Iran is working towards removing reliance on oil revenues, and the issue has been addressed in the current Iranian budget.

"Falling oil prices, therefore, cannot largely affect Iran's economy," Zarif asserted.

Iran wants to boost its oil export to reach the pre-sanctions level, Oil Minister Bijan Namdar Zanganeh told the delegation. "We expect the members of OPEC to pave the ground for an increase of Iran's oil production that will reach global markets when sanctions are lifted," he added.

The US imposed sanctions on Iran to curb the country's nuclear program which it claims is geared to military use. After eight days of marathon talks on Tehran's nuclear program in Lausanne, Switzerland, Iran and the P5+1 (a group of world powers including the US, Russia, China, UK and France, plus Germany) reached a framework agreement on April 2 that calls for lifting all trade sanctions against Iran should the two sides reach a final agreement by a self-imposed June 30 deadline.

Iran's oil exports have been cut by more than half to around 1.1 million barrels per day from a pre-sanctions level of 2.5 million bpd. It hopes to boost oil exports by one million bpd in just two months once sanctions are lifted.

Brent crude for June delivery LCOc1 was at $62.98 a barrel by 0706 GMT on Tuesday.