Zanganeh: OPEC Output Cuts “Highly Probable”

Zanganeh Says OPEC Output Cuts "Highly Probable"Zanganeh Says OPEC Output Cuts "Highly Probable"

Oil Minister Bijan Namdar Zanganeh said he is optimistic that OPEC members will agree to proposed production cuts at a meeting in Vienna later this month.

Zanganeh made the statement after meeting with the group’s secretary-general, Mohammed Barkindo, in Tehran on Saturday to discuss an accord that seeks to reduce output by as much as 1.3 million barrels a day, Bloomberg reported.

He described as “promising” information that was relayed to him by Barkindo about finalizing the agreement.

“It is highly probable that OPEC members will reach a consensus in the November meeting. I think OPEC members honor the agreement and would try to put it into action," Zanganeh said.

He said that Barkindo met with senior Iraqi officials to discuss that country’s resistance to production cuts and the result of those talks is “promising”, according to Iran's Oil Ministry.

Barkindo asked Zanganeh to show “more flexibility” at the Vienna talks to ensure the Algiers accord is implemented, the ministry said in a separate statement. Zanganeh assured Barkindo that Iran will do “everything possible” to reach a consensus, it said.

Asked what he regards as a fair oil price for both producers and consumers, Zanganeh said, “OPEC members have targeted an oil price of $55 to $60.”

Benchmark Brent crude rose by 37 cents to $46.86 per barrel on Friday.

The Organization of Petroleum Exporting Countries is seeking to trim output for the first time in eight years.

An agreement reached in Algiers in September to limit production has been complicated by Iran’s commitment to boost production and Iraq’s contention that it should be exempt so it can fund its war with Islamic State militants.

Since reaching a 2016 high near $52 a barrel last month, the oil price has retreated amid doubts about OPEC’s ability to carry out a deal, which would end a two-year policy of pumping without limits.

Without an accord at a meeting of the OPEC secretariat in Vienna on Nov. 30, the International Energy Agency has predicted a fourth consecutive year of oversupply in 2017.

On Friday, OPEC said it made progress toward a deal to cut production after another round of talks with Russia, though it left crucial details including the role of Iraq and Iran to be resolved in Vienna.

While ministers from Saudi Arabia and Algeria reiterated their goal of reducing the group’s production to 32.5 million barrels a day, they offered no clear details about how to resolve Iraq and Iran’s resistance. Nor did they secure a pledge from Russia to do more than cap production, currently at record levels.

Members of OPEC are “all hands on deck” to reach an agreement by the Vienna meeting, Barkindo said in an interview in Marrakech, Morocco, on Nov. 15.

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