Organization of Petroleum Exporting Countries (OPEC) is considering exemptions for three nations from any potential oil-production cuts, Bloomberg cited two people with knowledge of the proposal as saying. Saudi Arabia’s oil minister said he doesn’t anticipate a difficult meeting when the group meets on Nov. 27 to decide its response to slumping crude.
Iraq, Iran and Libya wouldn’t have to reduce supplies should OPEC agree to cut output at its gathering in Vienna, according to the people, who asked not to be identified in line with their national policies. Ali Al-Naimi, Saudi Arabia’s oil minister, told reporters in the Austrian capital that "it’s not the first time the oil market has been oversupplied."
“It makes sense that these three countries shouldn’t have to make further cuts” because they are already pumping less than they’re able to, Abhishek Deshpande, oil markets analyst at London-based Natixis, said. Saudi Arabia would probably want assurances from Iran, Iraq and Libya that they won’t increase output, he said. They pumped almost 7 million barrels a day between them last month, compared with total OPEC output of 31 million, according to estimates compiled by Bloomberg. Their combined 1970s peak was more than 10 million barrels a day.
“Due to Iran, because of sanctions, and to Libya, because of fighting between tribal militias,” the impact of rising shale oil production in the US was offset, the bank said. “But the disruptions aren’t increasing anymore, they are decreasing.”
Iran’s oil production is curtailed by US and European sanctions aimed at pressuring the country over its nuclear program. The Persian Gulf state pumped an average of 2.8 million barrels a day this year, down 23 percent from 3.6 million in 2011, the year before tighter sanctions were imposed, according to data compiled by Bloomberg.
Envoys representing Iran and a group of world powers agreed Monday to extend nuclear talks until July after failing to overcome differences at negotiations in Vienna.
Iran will protect its share of global crude sales under all circumstances, Oil Minister Bijan Namdar Zanganeh said Nov. 21, Bloomberg said, quoting the ministry’s news website Shana. The Persian Gulf nation can double oil exports within two months if sanctions are removed, he said.
Crude prices plunged into a bear market this year amid the highest US oil production in more than three decades and speculation that Saudi Arabia wouldn’t cut output in response to a surplus. Oil-market analysts are perfectly divided on whether OPEC will cut output when it meets, or leave it unchanged.
