Russia Could Help Control Oil Policies

Russia Could Help Control Oil PoliciesRussia Could Help Control Oil Policies

Iran's former representative in the Organization of Petroleum Exporting Countries has called for an effective coordination between Iran and Russia to control oil policies.

Seyyed Mohammad Ali Khatibi, a seasoned oil market analyst, said, "Even if Saudis offer substantial discounts to their customers, they cannot hinder the resumption of Iran's oil export to Europe."

The official added that firm plans have been made to raise Iran's production and export by 500,000 barrels per day, Mehr News Agency reported.

According to Khatibi, Saudis have not only captured Iran's oil market due to sanctions but also took extreme measures not to let Iran play a key role in regional and international markets.

"Prior to the imposition of sanctions on Iran, Saudis had reassured European crude consumers that oil market would not face oil shortage in case Iran's oil export is banned, because of which EU members called for a ban on Iran's oil as they were assured of the supply," he said.

Oil prices stood at $100 per barrel before Iran's sanctions and it was predicted that they would increase to $200 per barrel once sanctions are imposed.

"During Iran's protracted nuclear negotiations with P5+1 (the United States, Britain, France, Russia, China and Germany) in Vienna, Saudis neither cubed production nor decreased exports to exert double financial pressure on Iran," the analyst said.

"Poor diplomatic relations between Tehran and Riyadh will never translate into a concern regarding Iran's post-sanctions oil policies."  

Khatibi believes that Iran has its own loyal and traditional customers all over the world, especially in Europe.

Hence, as soon as sanctions become a thing of the past, Iran will regain the lost market share even if Saudis keep pumping or underselling their crude.

Underscoring the fact that Saudis will not stop their attempts to overshadow Iran's oil market, he asserted that Saudi Arabia has increased oil supply from 8 million barrels to 10.5 million a day and much of the oil surplus in the market is due to Saudi oversupply.

"Saudi Arabia's decision to flood world markets with oil is a mistake that the kingdom has repeated several times in the past four decades, resulting in oil prices to fall from $100 to as much as $35," he said.

Stressing that OPEC members should undertake regular consultations to oversee oil market activities, the official said, "Holding active energy dialogues with Russia, Iraq and Algeria and collaboration with other OPEC members would be the best policy to help stabilize oil prices in international markets and find a solution to stop the further decline in prices."

Khatibi noted OPEC is not the influential organization it used to be because of Saudis' destructive policies, though cooperation with non-OPEC producers can help restore stability to the market.

"Giant energy consumers will never depend on one country to meet their energy demand as most countries are planning to diversify into other energy resources, which explains why Saudis cannot change Iran's plan to boost oil exports by underselling or oversupplying the market," he said.

Oil prices briefly jumped on Monday, with WTI up more than 3% and Brent up more than 4% in early trading hours. Both benchmarks spiked above $38 per barrel. That is a long way from the $100 per barrel routinely seen in years past when Middle East tension spooked oil markets, but prices were up from the 11-year lows seen in December.    

The price of OPEC basket of 13 crudes stood at $31.79 a barrel on Tuesday, compared with $31.27 the previous Thursday, according to OPEC Secretariat calculations.