Saudis Adjust Stance on Iran Oil Increase

Saudis Adjust Stance  on Iran Oil IncreaseSaudis Adjust Stance  on Iran Oil Increase

OPEC maintained its policy of pumping near-record volumes of oil on Friday in a meeting in which the organization's biggest producer Saudi Arabia said it is open to cooperate with fellow producers to stabilize the market.

"We have said on more than one occasion we are willing to cooperate with anyone who can balance the market," Saudi Oil Minister Ali al-Naimi said during the 168th OPEC summit on Friday, Reuters reported.

He speculated that growing global demand could absorb an expected jump in Iranian production next year.

"Everyone is welcome to go into‎ the market," Naimi said of Iran. "[There are] absolutely no disagreements anywhere … Demand is going to increase anyway."

Naimi added that Riyadh has not cut investment. “Nothing has been curtailed. We have a responsibility to maintain our 12.5 million-barrels-a-day capacity.”

The group, which produces a third of global oil, decided to increase its collective output ceiling to 31.5 million barrels per day from the previous 30 million, two OPEC sources said, in a move that effectively acknowledged that members are pumping well in excess of the current ceiling.

The Saudis had previously said they would be prepared to consider a cut only if OPEC members Iraq and Iran agreed to cooperate and non-OPEC members such as Russia joined in.

Benchmark Brent oil futures are below $45 per barrel, just a few dollars off their six-year lows.

Iraqi Oil Minister Adel Abdel Mahdi said his country would further raise output next year after having steeply increased production in 2015.

But Moscow repeated this week it saw no chance of joint actions, and Iran and Iraq on Friday showed no willingness to curb supply either.

A report in newsletter Energy Intelligence suggested this week the Saudis might be ready to fine-tune policies and could start pushing for a global deal to curb supply to avoid oil prices remaining low for longer. But Naimi said on Friday the report was "baseless".

Russian Energy Minister Alexander Novak said on Thursday OPEC should bring its production levels close to reality.

Bringing the ceiling in line with real production could help bridge the gap in views between OPEC and non-OPEC. The two had last cooperated almost 15 years ago to cut output and prop up the prices following the 1998 financial crisis.

In an informal gathering of OPEC ministers on Thursday before the official meeting, OPEC kingpin Saudi Arabia insisted that other big producers outside the group such as Russia would have to join any output cuts by the organization, according to a person with knowledge of the discussions.

Iran Not Backing Out

Boosting production and reclaiming lost grounds in global crude market after the lifting of sanctions are "Iran's legitimate rights", Oil Minister Bijan Namdar Zanganeh said in Vienna.

"No one can take these rights away from us … we do not expect fellow OPEC members to withhold us from our rights," he told reporters in Hotel InterContinental Vienna.

"Any restriction would mean they want sanctions to remain in place, but it is unacceptable and unjust."

Zanganeh added that Tehran would discuss OPEC quotas or other action only when Iran reaches full output levels.

In a letter to OPEC Secretary-General Abdalla Salem el-Badri, he urged members of the Organization of Petroleum Exporting Countries to cut production by 1.3 million barrels and observe the 30-million-barrel-a-month ceiling.

The senior Iranian oil official slammed the removal of OPEC production ceiling as a "huge and historic mistake" in a statement earlier this week.

Tehran is planning to ramp up oil output by 500,000 bpd within a week after the removal of sanctions and raise production by 1 million bpd over the following six months.

OPEC has boosted production by almost 1.5 million bpd since November 2014. Data show the organization supplied 31.76 million bpd and 31.64 million bpd of oil in September and October, respectively.

Brent fell from more than $100 a barrel in July 2014 to less than half that amount six months later and is now trading at below $50 a barrel.

The 12 OPEC nations put out just 4.4% of the world’s gross domestic product last year but they control around 73% of the world’s oil reserves.