Diplomacy Can Help Iran Regain Oil Market Share

Diplomacy Can Help Iran Regain Oil Market ShareDiplomacy Can Help Iran Regain Oil Market Share

Diplomacy apparently would be the most effective way to regain Iran's lost oil market share Mohammad Ali Khatibi, Iran's former representative to the Organization of Petroleum Exporting Countries said Tuesday.

"Iran's competitors, particularly Saudi Arabia and Russia, are not willing to make room for Iran to maneuver easily in the market," Khatibi noted, adding that even if the international sanctions become history, Iran would still face formidable challenges in restoring its past position, Mehr news agency reported.

On the critical issue of maintaining and boosting market share, he said, "It is regrettable that the major oil producers are trying to raise their export quota instead of doing otherwise or adjust to market needs. Take the Saudis…they have increased production and export on an unprecedented level."

Tehran is under punitive economic sanctions because of its nuclear program. After marathon talks in Lausanne, Switzerland, Iran and the P5+1 (Britain, China, France, Russia, the US plus Germany) reached a framework agreement on April 2 that calls for lifting all trade sanctions against Iran. The details of the agreement are to be finalized by a June 30 deadline.

OPEC members on their 167th Meeting held on June 5th resolved to maintain the 30 mb/d ceiling and urged Member Countries to adhere to it. The biggest member in the Organization of Petroleum Exporting Countries boosted output to 10.1 million barrels a day in March, close to an all-time peak, the International Energy Agency reported on April 15.

Khatibi, however, was of the opinion that not permitting Iran to play a key role in the global oil market "will not cause trouble. Nonetheless, insisting on violating production ceilings will saturate the market resulting in further decline in prices."

Currently the world oil market is oversupplied to the tune of 1.5 million barrels a day and the figure is expected to reach 2 million if Iran is allowed to fulfill its post-sanctions objectives, that is exporting 2.5 million bpd.

According to Khatibi and other observers it is anticipated that oil prices can reach $70/barrel should OPEC and non-OPEC exporters abstain from flooding the already saturated international market.

"If every country supports the common interest of all oil-producing nations, the oil market will once again enter stable territory," the former OPEC envoy was quoted as saying.

Referring to the inapt policies adopted by OPEC in recent times Khatibi reiterated that the organization has done its best to force its non-OPEC rivals out of the market "but not only have they not left the market, rather their overall exports have shot up by as much as a million barrels a day."