The Organization of Petroleum Exporting Countries is moving toward maximizing its members' profit and stabilizing the market, the National Iranian Oil Company's former deputy for international affairs said.
"Instead of playing the role of a market strategist, OPEC members are making concerted efforts to generate as much revenue as possible by rebalancing the oversupplied market," Safar-Ali Keramati was also quoted as saying by Shana.
In 2016, OPEC members agreed to cut output by 1.2 million barrels a day starting in January to strengthen oil prices. Other oil-producing nations joined a few weeks later, agreeing to remove 558,000 barrels a day of crude oil from the market, resulting in speedy price recovery.
Prior to the implementation of the scheme, crude was sold at around $40 per barrel, which fetched around $70 per barrel on Tuesday. The oil cut pact will be in place through to the end of 2018.
Pointing to the adopted policy, Keramati said, "The strategy received sharp criticism in the beginning because of the internal challenges among members, yet they unanimously agreed to follow the plan as oil prices recovered very soon on the back of production cuts by OPEC, Russia and other producers, helping reduce the global inventory overhang."
According to the official, unlike the past, due to a lack of investment in upstream ventures, crude production capacity will not experience a dramatic rise in the foreseeable future.
"The Persian Gulf littoral states' OPEC members are heavily dependent on oil revenues," Keramati said, adding that if prices decline, they will face huge budget deficit. Highlighting OPEC members' unwillingness to collaborate in the past, Keramati said, "Secretary-General of OPEC Mohammad Barkindo and other politicians from Iran and Russia played a key role in settling the differences."
The official believes that despite OPEC's best intentions, their efforts are neither sufficient to save the market nor to meet the world's energy demand.
Hence, cooperation between OPEC and non-OPEC members is and will be crucial to fight the global glut.
Referring to Saudis' unprecedented cooperation with other members, he noted that the country has realized the economic significance of teamwork.
Saudi Arabia is pumping around 7 million barrels per day these days that is 3 million barrels fewer than the period before the deal was clinched.
"Brent and WTI prices are currently approaching $75 a barrel, suggesting crude markets are rebalancing," he said.
The official noted that if the global economy continues to thrive, the market can digest higher oil prices.
On the other hand, the market is predictable, because of which oil producers, including Iran, need to be realistic about increasing their market share.
