Support for Moves to Stabilize Oil Market

Iran's August exports are the highest since January 2012.Iran's August exports are the highest since January 2012.
Iran’s former OPEC envoy says Tehran may consider joining an initiative to freeze oil production to support prices if it is excluded from the plan for 2-3 years

President Hassan Rouhani says Tehran supports any move to stabilize the international oil market and lift prices.

"Instability and falling oil prices are harmful to all countries, especially oil producers," Rouhani said, Oil Ministry news agency Shana quoted Rouhani as saying late on Sunday, Reuters reported.

"Tehran welcomes any move aimed at market stability and improvement of oil prices based on justice, fairness and fair quota of all the oil producers," the president said, referring to a meeting between OPEC and non-OPEC producers in Algeria next week.

Rouhani was speaking to Ecuadorean President Rafael Correa on the sidelines of the Non-Aligned Movement (NAM) Summit in Venezuela.

Iran, OPEC's third-largest producer, has been boosting its oil output after the lifting of international sanctions in January. Tehran refused to join a previous attempt this year by OPEC and non-OPEC members such as Russia to stabilize production, and talks collapsed in April.

According to reports, Iran's crude exports have climbed from 1.9 million bpd in June and 1.83 million bpd in July. Iran's August exports are the highest since January 2012, boosted by record purchases from the world's third-largest oil importer India and a 48% jump that brought European sales to 630,000 bpd.

OPEC members will meet on the sidelines of the International Energy Forum (IEF), which groups producers and consumers, in Algeria on Sept. 26-28. Non-OPEC producer Russia is also attending the forum.

OPEC will probably revive talks on freezing oil production levels when it meets the non-OPEC nations in Algiers, sources have told Reuters.

Saudi Arabia and Russia agreed this month to cooperate in oil markets, saying they could limit future output.

  Freeze Deal

In an interview on Saturday, Iran’s former OPEC envoy said Tehran may consider joining an initiative to freeze oil production to support prices if it is excluded from the plan for two to three years.

“Iran has always reiterated that setting a production ceiling should be accompanied by reviving the individual quota system, otherwise, reinstating a general ceiling will only benefit those who have excess production capacity, helping them chip away at the market share of smaller producers,” Mehdi Asali was quoted as saying by Shana in a reference to rival producer Saudi Arabia.

OPEC stopped setting production quotas for individual members in 2011 and abandoned an output ceiling entirely in December last year.

Taking stock of the previous push to freeze production in a gathering in Doha, Asali stressed most OPEC members intend to reinstate a general production ceiling without individual quotas, hoping that while maintaining their current output levels, other non-OPEC countries will reduce production as demand rises, all of which may lead to more reasonable oil prices.

"Without Iran, OPEC's third largest producer, any agreement on an output ceiling will not last," Asali said.

“Iran can also promise in a non-binding agreement that its production growth will be in line with the global market demand, which would not adversely affect prices,” he said.

He added that the rise in crude prices in recent months, which fell to their lowest levels in January since 2004, was driven by a series of global outages, mainly in Canada, Nigeria and Libya.

Oil traded above $100 per barrel in mid-2014, but prices crashed to multi-year lows in January before paring some losses. Oil briefly surpassed the $50 mark last month but has since held at $45 per barrel.