Commitment to Oil Supply Cuts

Oil Minister Bijan Namdar Zanganeh says Iran will continue to comply with an OPEC agreement to cut crude supplies as long as other members of the oil group maintain their production within the framework of the November supply cut oil agreement.

"Stabilization of oil prices at around $55 indicates that the majority of OPEC members have fulfilled their pledges to make cuts and lift sagging prices. Iran will not exceed its production quota, which stands at 3.8 million barrels per day," Zanganeh was quoted as saying by IRNA Sunday.

Members of the Organization of Petroleum Exporting Countries reached an agreement in Vienna last year to reduce output by 1.2 million barrels daily, effective in the first half of 2017, with Saudi Arabia to shoulder nearly 40% of the burden. 13 non-members including Russia vowed to extend cuts by an additional 558,000 barrels per day to ease a global glut.

Highlighting the fact that the demand for Iran’s crude exceeds its supply, Zanganeh noted, "We have no worries on selling oil, nor do we intend to wage a price war. However we are ready to compete in global markets within the framework of commercial principles," he said without elaboration.

The official pointed to discrepancies between government data on oil output and figures compiled by OPEC's "secondary sources", and denied reports that Iran is pumping above the agreed levels. “Iran will stick to the level it has already accepted.”

Tehran was exempt from the cuts and was allowed to slightly raise production from its October output level which is used as the baseline for the supply cut deal. The exemption was seen as a victory for Tehran, which has long argued it needs to regain market share lost under international sanctions.

The market has been oversupplied since mid-2014, prompting members of the Organization of the Petroleum Exporting Countries and some non-OPEC producers to agree to cut output in the first six months of 2017.

OPEC meets on May 25 to consider extending the cuts beyond June. According to reports, Saudi Arabia, Kuwait and most other OPEC members are leaning towards extension if agreement is reached with other producers.

According to Ali Kardor, the chief executive of National Iranian Oil Company, oil production now is 3.9 million bpd.

"Oil output will reach 4.05 million bpd this year," he said, noting that Iran is targeting 5 million barrels a day by 2021 with the help of new investment and technology.

"Oil output will increase by 350,000 bpd this year, which will offset the 300,000 bpd loss in production," Kardor added.

Iran is the third largest OPEC producer after Saudi Arabia and Iraq that pumped 9.99 million bpd and 4.4 million barrels a day in March, according to OPEC's sources.

Oil shipments from Iran reached a daily average of 2.6 million barrels in fiscal 2016-17, the oil minister said last week.