26 May 2024
Tuesday 21 October 2014 - 12:52
Story Code : 122214

Iran shuns image as OPEC hawk while seeking sanctions end

Iran, eager for an end to sanctions that have restricted its oil exports, is shunning its image as OPECs price hawk by avoiding calls for an emergency session of the group to support prices.
Oil Minister Bijan Namdar Zanganeh consulted with Iranian President Hassan Rouhani about political and economic reasons for the price collapse, the ministrys news website Shana reported yesterday. No emergency meeting of the Organization of Petroleum Exporting Countries is necessary to discuss the slide, Shana said. Rouhani told Zanganeh to use the oil diplomacy tool to try to prevent a further decrease, the state-run Mehr news agency said Oct. 19, without elaborating.

They have their wings clipped a bit at the moment because they cant really produce any more than they do, Ole Hansen, head of commodity strategy at Saxo Bank A/S, said in an interview in Dubai yesterday. Its difficult for them to call for any strict action when they know that when sanctions are lifted, theyre the ones that are going to ramp up production.

OPEC, supplier of about 40 percent of the worlds oil, is scheduled to meet Nov. 27 in Vienna to assess production and market conditions.Brent crude, a global benchmark, has tumbled 26 percent since June and settled at $85.40 a barrel yesterday inLondon. The decline has prompted speculation that OPEC may cut production to tighten supply.Venezuelahas called for the group to convene earlier in an emergency session.
Nuclear Talks
Iran was for years a vocal advocate with Venezuela for reducing OPEC output as a response to falling prices. The Persian Gulf producer isnt concerned about the latest decrease, Roknoddin Javadi, deputy oil minister and managing director of the National Iranian Oil Co., told the Mehr agency in an Oct. 14 report.

International sanctions imposed on Iran over its nuclear program are choking crude exports, the nations main source of income. The government is negotiating with the U.S. and five other world powers over an agreement that would lift the curbs. The countries have set a Nov. 24 deadline for an accord, three days before OPEC meets.

Iran is constrained by sanctions, Mehdi Varzi, a former Iranian diplomat and director of Varzi Energy Ltd., an energy-consulting company, said by phone Oct. 16. They may have made the calculation that if a nuclear deal can be struck, they will be permitted to increase their exports, so why talk about an OPEC cut right now?
Slowing Growth
TheInternational Energy Agency, the Paris-based adviser to industrialized countries, projects that demand for crude this year crude will grow by the least since 2009. OPEC boosted production to a 13-month high in September, pumping 30.66 million barrels a day, the IEA said Oct. 14.

Saudi Arabia, the worlds biggest exporter, has appeared determined to defend its market share inAsia, even at the expense of lower prices, the IEA said. Kuwaits oil minister said Oct. 12 there may be no room to restore prices by trimming supply.

Oil exports from Iran fell to the lowest level on record in August, according to a release yesterday by the Joint Organisations Data Initiative. Economic growth and energy demand is slowing inChina, Irans biggest oil buyer, even as the countrys sales are restricted by U.S. and European Union sanctions.

Venezuelan PresidentNicolas Madurocalled for an emergency meeting to address falling prices in a televised broadcast Oct. 17.Libyawants OPEC to cut output to stem the decline in prices, Mohamed Elharari, a spokesman for Libyas National Oil Co., said by phone Oct. 17.
Sanctions Impact
Irans $400 billion economy shrank more than 7 percent over the past two years, according to International Monetary Fund data, as sanctions drove oil output to the lowest since 1990 and deterred investment. Growth is set to resume this year, the IMF says. Inflation has slowed to 15 percent, from a peak of 32 percent in October 2012, according to the Iranian central bank.

The country could boost output by 700,000 barrels a day within two months if international sanctions were lifted, Oil Minister Bijan Namdar Zanganeh told reporters at the OPEC meeting in Vienna in June.

Theyre trying to take a less aggressive stance, Tom James, managing director of consultancy Navitas Resources, who counts sovereign wealth funds and crude producers among his clients, said by phone from Dubai Oct. 15. Theyre facing the issue of the sanctions negotiations now, so they dont want to add fuel to that fire.

Iran, eager for an end to sanctions that have restricted its oil exports, is shunning its image as OPECs price hawk by avoiding calls for an emergency session of the group to support prices.

Oil Minister Bijan Namdar Zanganeh consulted with Iranian President Hassan Rouhani about political and economic reasons for the price collapse, the ministrys news website Shana reported yesterday. No emergency meeting of the Organization of Petroleum Exporting Countries is necessary to discuss the slide, Shana said. Rouhani told Zanganeh to use the oil diplomacy tool to try to prevent a further decrease, the state-run Mehr news agency said Oct. 19, without elaborating.

They have their wings clipped a bit at the moment because they cant really produce any more than they do, Ole Hansen, head of commodity strategy at Saxo Bank A/S, said in an interview in Dubai yesterday. Its difficult for them to call for any strict action when they know that when sanctions are lifted, theyre the ones that are going to ramp up production.

OPEC, supplier of about 40 percent of the worlds oil, is scheduled to meet Nov. 27 in Vienna to assess production and market conditions.Brent crude, a global benchmark, has tumbled 26 percent since June and settled at $85.40 a barrel yesterday inLondon. The decline has prompted speculation that OPEC may cut production to tighten supply.Venezuelahas called for the group to convene earlier in an emergency session.
Nuclear Talks
Iran was for years a vocal advocate with Venezuela for reducing OPEC output as a response to falling prices. The Persian Gulf producer isnt concerned about the latest decrease, Roknoddin Javadi, deputy oil minister and managing director of the National Iranian Oil Co., told the Mehr agency in an Oct. 14 report.

International sanctions imposed on Iran over its nuclear program are choking crude exports, the nations main source of income. The government is negotiating with the U.S. and five other world powers over an agreement that would lift the curbs. The countries have set a Nov. 24 deadline for an accord, three days before OPEC meets.

Iran is constrained by sanctions, Mehdi Varzi, a former Iranian diplomat and director of Varzi Energy Ltd., an energy-consulting company, said by phone Oct. 16. They may have made the calculation that if a nuclear deal can be struck, they will be permitted to increase their exports, so why talk about an OPEC cut right now?
Slowing Growth
TheInternational Energy Agency, the Paris-based adviser to industrialized countries, projects that demand for crude this year crude will grow by the least since 2009. OPEC boosted production to a 13-month high in September, pumping 30.66 million barrels a day, the IEA said Oct. 14.

Saudi Arabia, the worlds biggest exporter, has appeared determined to defend its market share inAsia, even at the expense of lower prices, the IEA said. Kuwaits oil minister said Oct. 12 there may be no room to restore prices by trimming supply.

Oil exports from Iran fell to the lowest level on record in August, according to a release yesterday by the Joint Organisations Data Initiative. Economic growth and energy demand is slowing inChina, Irans biggest oil buyer, even as the countrys sales are restricted by U.S. and European Union sanctions.

Venezuelan PresidentNicolas Madurocalled for an emergency meeting to address falling prices in a televised broadcast Oct. 17.Libyawants OPEC to cut output to stem the decline in prices, Mohamed Elharari, a spokesman for Libyas National Oil Co., said by phone Oct. 17.
Sanctions Impact
Irans $400 billion economy shrank more than 7 percent over the past two years, according to International Monetary Fund data, as sanctions drove oil output to the lowest since 1990 and deterred investment. Growth is set to resume this year, the IMF says. Inflation has slowed to 15 percent, from a peak of 32 percent in October 2012, according to the Iranian central bank.

The country could boost output by 700,000 barrels a day within two months if international sanctions were lifted, Oil Minister Bijan Namdar Zanganeh told reporters at the OPEC meeting in Vienna in June.

Theyre trying to take a less aggressive stance, Tom James, managing director of consultancy Navitas Resources, who counts sovereign wealth funds and crude producers among his clients, said by phone from Dubai Oct. 15. Theyre facing the issue of the sanctions negotiations now, so they dont want to add fuel to that fire.

By Bloomberg

 

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