Tehran, Caracas Seek Crude Market Stability

Tehran and Caracas are ready to adopt measures to help stabilize the global oil market and improve prices.

Iran's Oil Minister Bijan Namdar Zanganeh made the statement in a meeting in Tehran on Wednesday with his Venezuelan counterpart, Eulogio Del Pino, who was reappointed as minister last month, Shana reported.

"Current oil prices indicate that cooperation between members of the Organization of Petroleum Exporting Countries and non-OPEC producers has yielded positive results," Zanganeh said.

Pointing to the 98% OPEC and non-OPEC's compliance with production cuts in the last eight months, the official expressed optimism that members would further meet their commitments.

According to Zanganeh, the progress in delivery of the agreement is good, yet it should be required to improve more significantly.

Last December, Russia and 10 other non-OPEC nations agreed to join OPEC's output cuts for the first time in 15 years. In May 2017, OPEC and non-members led by Moscow agreed to extend cuts in output by a further nine months to March 2018.

Zanganeh said on Wednesday that possible extension of the cut deal will be discussed in the ministerial meeting of Gas Exporting Countries Forum that will be held on November 4 in Moscow.

--- Complying with Obligations

"Venezuela, one of the biggest supporters and promoters of the deal, will continue to fully stick to its obligations," Del Pino said.

According to Russia’s TASS news agency, Del Pino plans to embark on a 10-day tour ahead of the next meeting of the Joint OPEC-Non-OPEC Ministerial Monitoring Committee in Vienna, and plans to visit Moscow and Riyadh.

The Venezuelan minister will discuss the implementation of the production cut deal with the leaders of the OPEC and non-OPEC nations party to the agreement and “the introduction of changes, if need be”, according to Russian media.

The oil market is moving in the right direction toward rebalancing, but all options, including extending the cuts beyond March 2018, are left open, the monitoring committee said.

Venezuela’s oil revenues account for 95% of its export earnings—almost the entire foreign cash it can get. But its oil production is falling not only because it is keeping its agreement with OPEC, but also because it simply cannot afford to reinvest in its oil industry—for years it has had to use its oil revenues to pay for imported goods.

Venezuela’s oil production has declined by a fifth over the past two years, to 1.93 million bpd in July, from an average of 2.375 million bpd in 2015.

Venezuela has reportedly stopped using US dollars in its oil trade activities in order to keep the country immune to Washington’s economic penalties.

The Wall Street Journal quoted sources familiar with the situation as saying that Venezuelan authorities have told oil traders that the country would no longer make or accept payments for oil deals in US dollars.

Oil traders who export Venezuelan oil or import petroleum products have already begun to convert invoices to euros, the media outlet reported.