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Iran, Iraq at loggerheads with Saudis ahead of OPEC meeting

Iran has argued it wants to raise production to regain market share lost under Western sanctions

Reuters  |  Vienna 

An oil refinery
An oil refinery

and are resisting pressure from to curtail production, making it hard for the Organization of the Petroleum Exporting Countries to reach a global output-limiting deal when it meets on Wednesday.

sources told Reuters a meeting of experts in Vienna on Monday failed to bridge differences between OPEC's de facto leader, Saudi Arabia, and the group's second- and third-largest producers over the mechanics of output cuts.

"The revival of Iran's lost share in the market is the national will and demand of Iranian people," Iranian news agency Shana quoted the country's minister Bijan Zanganeh, who was due to arrive in Vienna later on Tuesday, as saying.

OPEC, which accounts for a third of global production, agreed in September to cap output at around 32.5-33.0 million barrels per day versus the current 33.64 million bpd to prop up prices, which have halved since mid-2014.

has argued it wants to raise production to regain market share lost under Western sanctions, when its political arch-rival increased output.

In recent weeks, Riyadh offered to cut its own output by 0.5 million bpd, according to sources, and suggested limit production at below 4 million bpd. Tehran has sent mixed signals including that it wanted to produce 4.2 million bpd.

has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State.

The argument between and mainly focuses on whether Baghdad should use its own output estimates to limit production or rely on lower figures from OPEC's experts.

As tensions within mounted, Saudi Energy Minister Khalid al-Falih said at the weekend that markets would rebalance even without an output-limiting pact. He had previously said Riyadh was keen for a deal.

Falih was not expected to land in Vienna before Tuesday evening, leaving little time for traditional pre-meeting discussions with other ministers.

 

GOLDMAN SEES DEFICIT

Some analysts including Morgan Stanley and Macquarie have said prices will correct sharply if fails to reach a deal, potentially going as low as $35 per barrel. Brent crude edged down on Tuesday to trade near $48.

Goldman Sachs, one of the most active banks in trading, said on Tuesday it saw prices averaging $45 a barrel until mid-2017 even without any deal and added the market was likely to move into a deficit in the second half of 2017.

A year ago, Goldman was saying a global glut would push prices to around $20. Prices fell to multi-year lows of $27 per barrel in January 2016.

Besides disagreements with and Iraq, has also signalled it was unhappy with Russia's position.

ministers from members Algeria and Venezuela were due in Moscow on Tuesday in a final attempt to persuade non-Russia to take part in cuts instead of merely freezing output, which has reached new highs in the past year.

The Kremlin said President Vladimir Putin spoke to Iranian President Hassan Rouhani and both highlighted "the importance of OPEC's efforts to cap production as a key measure to stabilise global markets". It did not say what Russia could contribute to the effort.

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Iran, Iraq at loggerheads with Saudis ahead of OPEC meeting

Iran has argued it wants to raise production to regain market share lost under Western sanctions

Iran has argued it wants to raise production to regain market share lost under Western sanctions

and are resisting pressure from to curtail production, making it hard for the Organization of the Petroleum Exporting Countries to reach a global output-limiting deal when it meets on Wednesday.

sources told Reuters a meeting of experts in Vienna on Monday failed to bridge differences between OPEC's de facto leader, Saudi Arabia, and the group's second- and third-largest producers over the mechanics of output cuts.

"The revival of Iran's lost share in the market is the national will and demand of Iranian people," Iranian news agency Shana quoted the country's minister Bijan Zanganeh, who was due to arrive in Vienna later on Tuesday, as saying.

OPEC, which accounts for a third of global production, agreed in September to cap output at around 32.5-33.0 million barrels per day versus the current 33.64 million bpd to prop up prices, which have halved since mid-2014.

has argued it wants to raise production to regain market share lost under Western sanctions, when its political arch-rival increased output.

In recent weeks, Riyadh offered to cut its own output by 0.5 million bpd, according to sources, and suggested limit production at below 4 million bpd. Tehran has sent mixed signals including that it wanted to produce 4.2 million bpd.

has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State.

The argument between and mainly focuses on whether Baghdad should use its own output estimates to limit production or rely on lower figures from OPEC's experts.

As tensions within mounted, Saudi Energy Minister Khalid al-Falih said at the weekend that markets would rebalance even without an output-limiting pact. He had previously said Riyadh was keen for a deal.

Falih was not expected to land in Vienna before Tuesday evening, leaving little time for traditional pre-meeting discussions with other ministers.

 

GOLDMAN SEES DEFICIT

Some analysts including Morgan Stanley and Macquarie have said prices will correct sharply if fails to reach a deal, potentially going as low as $35 per barrel. Brent crude edged down on Tuesday to trade near $48.

Goldman Sachs, one of the most active banks in trading, said on Tuesday it saw prices averaging $45 a barrel until mid-2017 even without any deal and added the market was likely to move into a deficit in the second half of 2017.

A year ago, Goldman was saying a global glut would push prices to around $20. Prices fell to multi-year lows of $27 per barrel in January 2016.

Besides disagreements with and Iraq, has also signalled it was unhappy with Russia's position.

ministers from members Algeria and Venezuela were due in Moscow on Tuesday in a final attempt to persuade non-Russia to take part in cuts instead of merely freezing output, which has reached new highs in the past year.

The Kremlin said President Vladimir Putin spoke to Iranian President Hassan Rouhani and both highlighted "the importance of OPEC's efforts to cap production as a key measure to stabilise global markets". It did not say what Russia could contribute to the effort.

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Business Standard
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Iran, Iraq at loggerheads with Saudis ahead of OPEC meeting

Iran has argued it wants to raise production to regain market share lost under Western sanctions

and are resisting pressure from to curtail production, making it hard for the Organization of the Petroleum Exporting Countries to reach a global output-limiting deal when it meets on Wednesday.

sources told Reuters a meeting of experts in Vienna on Monday failed to bridge differences between OPEC's de facto leader, Saudi Arabia, and the group's second- and third-largest producers over the mechanics of output cuts.

"The revival of Iran's lost share in the market is the national will and demand of Iranian people," Iranian news agency Shana quoted the country's minister Bijan Zanganeh, who was due to arrive in Vienna later on Tuesday, as saying.

OPEC, which accounts for a third of global production, agreed in September to cap output at around 32.5-33.0 million barrels per day versus the current 33.64 million bpd to prop up prices, which have halved since mid-2014.

has argued it wants to raise production to regain market share lost under Western sanctions, when its political arch-rival increased output.

In recent weeks, Riyadh offered to cut its own output by 0.5 million bpd, according to sources, and suggested limit production at below 4 million bpd. Tehran has sent mixed signals including that it wanted to produce 4.2 million bpd.

has also been pressing for higher output limits, saying it needs more money to fight the militant group Islamic State.

The argument between and mainly focuses on whether Baghdad should use its own output estimates to limit production or rely on lower figures from OPEC's experts.

As tensions within mounted, Saudi Energy Minister Khalid al-Falih said at the weekend that markets would rebalance even without an output-limiting pact. He had previously said Riyadh was keen for a deal.

Falih was not expected to land in Vienna before Tuesday evening, leaving little time for traditional pre-meeting discussions with other ministers.

 

GOLDMAN SEES DEFICIT

Some analysts including Morgan Stanley and Macquarie have said prices will correct sharply if fails to reach a deal, potentially going as low as $35 per barrel. Brent crude edged down on Tuesday to trade near $48.

Goldman Sachs, one of the most active banks in trading, said on Tuesday it saw prices averaging $45 a barrel until mid-2017 even without any deal and added the market was likely to move into a deficit in the second half of 2017.

A year ago, Goldman was saying a global glut would push prices to around $20. Prices fell to multi-year lows of $27 per barrel in January 2016.

Besides disagreements with and Iraq, has also signalled it was unhappy with Russia's position.

ministers from members Algeria and Venezuela were due in Moscow on Tuesday in a final attempt to persuade non-Russia to take part in cuts instead of merely freezing output, which has reached new highs in the past year.

The Kremlin said President Vladimir Putin spoke to Iranian President Hassan Rouhani and both highlighted "the importance of OPEC's efforts to cap production as a key measure to stabilise global markets". It did not say what Russia could contribute to the effort.

image
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