Rouhani, Maduro Discuss Ways to End Oil Market Volatility

Brent futures climbed above $50 a barrel and US crude to three-month highs after Rouhani’s comments.Brent futures climbed above $50 a barrel and US crude to three-month highs after Rouhani’s comments.

President Hassan Rouhani told his Venezuelan counterpart Nicolas Maduro in a phone call that it is essential for oil producing countries to take a decision to raise prices and stabilize the volatile market.

"All countries should help the committee of experts to make the decision in the (OPEC's) November meeting that will lift prices," Rouhani was quoted as saying by IRNA on Monday, Reuters reported.

Rouhani said OPEC members also need to confer with non-OPEC members in their search for higher crude prices and market stability.

Iran and Venezuela are members of the Organization of Petroleum Exporting Countries which agreed at an informal meeting in Algeria last week on modest oil output cuts in the first such deal since 2008.

Crude futures prices rose, taking Brent above $50 a barrel and US crude to three-month highs after comments by Rouhani exhorting the need for other oil producers to join OPEC in supporting the market.

How much oil each country will produce is to be decided at the next formal OPEC meeting in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia.

Venezuela, grappling with a severe economic crisis aggravated by plummeting low oil prices, has lobbied hard in recent months for OPEC and other oil producers to cut output so that prices would rise in the long saturated international market.

Oil prices have fallen by more than 50% over the past two years and pushed exporting countries into deep deficits unheard of in recent memory. A barrel  of crude sold for more than a hundred dollars in 2014  compared to less than $50 now.

Maduro said he had a long and positive conversation with Rouhani.

"We promised to stay in permanent coordination to keep consolidating this agreement with OPEC and new alliances with producer countries like Russia," the he said in a televised broadcast on Monday.

Oil prices jumped more than 5% last week as many traders said they were impressed OPEC had managed to reach a compromise after years of wrangling, especially between top producers Saudi Arabia and Iran.

A previous attempt to freeze or cut production in April failed when Saudi Arabia insisted that Iran should participate even without recouping its rightful production levels it lost under international sanctions.

Saudi Arabia, OPEC’s biggest producer, softened its stance in Algiers, with Energy Minister Khalid Al-Falih saying that Iran, along with Libya and Nigeria, should be allowed to “produce at the maximum levels that make sense”.

  Production, Export Outlook

Iran, freed from international restrictions imposed over the dispute on its nuclear program, is returning to the global oil market faster than analysts had expected.

Data compiled by OPEC shows that Iran is now pumping more than 3.6 million bpd of crude, more than 1 million barrels higher than its peak production levels when sanctions were in place. According to Oil Minister Bijan Namdar Zanganeh, Iran wants to produce about 4 million barrels of crude a day to regain its pre-sanctions share of the market.

Iran aims to increase crude oil exports to 2.35 million barrels a day in the coming months from about 2.2 million barrels a day, IRNA reported Sunday, citing Mohsen Ghamsari, National Iranian Oil Company's director for international affairs.

Reuters cited two industry sources as saying on Monday that Iran's oil exports reached its pre-sanctions peak of around 2.8 million barrels a day last month, largely owing to the surge in gas condensates output—an ultra light blend of crude found in the Persian Gulf's gas reservoirs.

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