Recouping Oil Market Share a National Priority

Recouping Oil Market  Share a National Priority
Recouping Oil Market  Share a National Priority

Arab members of OPEC as well as the world's top oil producer Russia should make room for Iran's return to the global oil market, a senior energy analyst said, adding that winning back market share is a "national priority".

"Iran does not want oil prices to nosedive, it wants to win back the market share it lost to the likes of Saudi Arabia, Russia and the UAE," Abdollah Younesara told ILNA in an interview.

The statement comes days after Saudi Oil Minister Ali al-Naimi categorically ruled out any production cut to help prop up prices, sending a strong signal that the kingdom is not willing to make way for additional Iranian crude.

Younesara said recouping market share is a "national priority", stressing that a second priority is to support any measure that would help restore balance to the oil market "only if it helps win back market share".

"They [producing countries] should not expect Iran to not boost output. Iran has only recently come back while other producers have been pumping at peak levels," he said.

Iran pumped an average of 3.6 million barrels per day in 2011, but sanctions cut the country's production to around 2.7 million barrels, with exports falling to little more than 1 million bpd from around 2.6 bpd under the sanctions regime. The Islamic Republic is now pumping near 3 million bpd.

Saudi Arabia–de facto leader of the Organization of Petroleum Exporting Countries—and Russia are in a tight race to be crowned the world's top oil producer. The two countries have ramped up production to record-high levels over the past few months, pumping more than 10 million barrels a day.

Data show Russia edged up Saudi Arabia in January, pumping slightly shy of 11 million bpd against the kingdom's 10.2 million bpd.

Younesara also touched on a tentative agreement between Moscow and Riyadh to freeze oil production at January levels.

"Iran, in general, agrees with this [output freeze deal] … It is in favor of controlling the market and it has an impact on prices," he said.

Earlier this month, Russia, Saudi Arabia, Qatar and Venezuela announced their willingness to cap output in a surprise meeting in Doha, raising hopes for an agreement that would help boost sluggish prices.

Negotiations were followed by a meeting in Tehran as Iraq, Venezuela and Qatar tried to talk Iran into joining the pact.

Iran's Oil Minister Bijan Namdar Zanganeh initially appeared to support the deal by saying the Persian Gulf country would "support any measure to help improve prices".

However, in an incendiary remark this week, Zanganeh called the oil freeze deal "a joke".

"Some neighboring countries want to freeze production at 10 million bpd and we freeze at 1 million bpd. This is a very funny joke," he said in a not-so-subtle jab at Saudi Arabia.

Oman, Middle East's largest non-OPEC producer, has thrown its weight behind Iran's oil production plans.

"Given the damage Iran's oil exports have suffered as a result of western sanctions, the country can be exempted from a possible OPEC agreement on freezing production," Omani Oil Minister Mohammed bin Hamad al-Rumhy said this week.