High-Stakes Oil Talks in Tehran

High-Stakes Oil Talks in TehranHigh-Stakes Oil Talks in Tehran

Oil Minister Bijan Namdar Zanganeh said on Wednesday Iran will support "any measure to help stabilize the global oil market and improve prices." He made the statement after a closed-door meeting with his counterparts from Iraq, Qatar and Venezuela in Tehran.

"We had a good meeting today… we are open to collaboration between OPEC and non-OPEC [producers]," he was quoted by ISNA as saying.

Referring to the turmoil in crude prices and production since mid-2014, he said, "We support the decision to maintain production ceilings," and noted that the recent proposal to freeze oil output is "the first step" to expand cooperation between OPEC and producers outside the organization.

The meeting in Tehran came on the heels a tentative agreement Tuesday between Saudi Arabia and non-OPEC Russia, the world's two top producers and exporters, to freeze production at January levels if other big oil nations agree to join, Reuters reported.

A top Iranian oil official had earlier said the country would resist plans to restrain production.

"Asking Iran to freeze its oil production level is illogical ... when Iran was under sanctions, some countries raised their output and caused the drop in oil prices," Iran's OPEC envoy, Mehdi Asali, was quoted as saying by the Shargh daily newspaper on Wednesday.

"How can they expect Iran to cooperate now and pay the price? We have repeatedly said that Iran will increase its crude output until reaching the pre-sanctions production level."

OPEC members Qatar, Kuwait, the UAE and Venezuela said they would join the pact, aimed at tackling a growing oversupply and helping prices recover from their lowest in over a decade.

The coordinated effort by Venezuelan Oil Minister Eulogio Del Pino, Iraqi Oil Minister Adel Abdel Mahdi and Qatari Energy Minister Mohammad bin Saleh al-Sada was cold-shouldered by Zanganeh on Tuesday.

"What is important is that the oil market is grappling with an oversupply and Iran will not back out from its [market] share."

  Special Terms

Two non-Iranian sources close to the OPEC discussions told Reuters Iran might be offered special terms as part of an output freeze deal.

The sources did not elaborate on the special terms, which could be anything from setting limited production increase levels for Iran to linking future output rises to a recovery in oil prices.

Iran exported around 2.5 million barrels per day of crude before 2012. Sanctions cut that to around 1.1 million bpd. A Reuters survey released on Jan. 5 showed Iranian production at 2.9 million bpd in December.

Olivier Jakob from Petromatrix consultancy said that if Saudi Arabia were to freeze output at January levels, the kingdom would need to cut exports by 0.5 million bpd in the summer months, when it burns more oil for power generation at home.

"The production freeze can therefore be seen as an un-official way for Saudi Arabia to make some room for the restart of the Iranian exports," he said.

The last global deal, involving OPEC and non-OPEC producers, dates back to 2001, when Saudi Arabia persuaded Mexico, Norway and Russia to contribute to production cuts, although Moscow never followed through and raised exports instead.

The fact that output from Saudi Arabia and Russia is near record highs complicates chances for a new agreement.