OPEC-Member Minister to Visit Tehran to Discuss Production
December 20, 1998 - 0:0
DUBAI OPEC power Iran is not expected to change its position on oil production, a bitter dispute blocking fresh moves by the battered cartel to rescue collapsed prices, an Iranian oil source said on Saturday. "Any new discussions or measures to help the market are all helpful. But as far as Iran's position on its production cut baseline, there is no way this will change," the source, who requested anonymity, told Reuters. The issue has come under the spotlight following an accord between Saudi Arabia, Venezuela and non-OPEC Mexico at talks in Madrid on Thursday designed to secure Venezuelan compliance with cuts promised earlier this year.
Mexico's Oil Minister Luis Tellez said on Friday after the Madrid meeting that Tehran was key to further progress on countering falling prices and that an Organization of Petroleum Exporting Countries minister would visit Iran soon to discuss production. Tellez warned that if Iran sticks to its production baseline of 3.925 million barrels per day (bpd) "it will work against the agreement reached in Madrid." The deal by the key producers trio, who masterminded two previous rounds of OPEC and non-OPEC supply curbs, has set the stage for new production cuts to battle global oversupply.
The search for further output cuts has become more urgent in a market that remained depressed despite the heaviest U.S. and British military attacks on key producer Iraq since the 1991 Persian Gulf War. The Madrid deal was a crucial step forward because it obtained the agreement of an incoming caracas government to remove from the market overproduction of more than 125,000 bpd.
Markets will now focus on Iran to see if the Islamic Republic would be open to compromise that could pave the way for further global production cuts. Iran wants OPEC to recognise 3.925 million bpd as the basis for its output reduction and any future cuts instead of the 3.623 million bpd judged by the media. National Iranian Oil Company's statistics showed peak output in March of 3.925 million though February output, the key month used by OPEC as the baseline for this year's output cuts, was lower at 3.795 million.
The Iranian oil source said Tehran was using the March figure because the 3.925 million bpd level in that month came closest to the 3.942 million bpd quota Iran was allocated in an OPEC Jakarta meeting in 1997. He said Iran was only able to fully benefit from OPEC's 1997 decision to raise its output by 10 percent in March, when its output climbed to 3.925 million bpd after gradual increases.
Harmony between OPEC rivals Saudi Arabia, Venezuela and Iran -- the cartel's giant producers -- is key to any future efforts to improve the oil market. OPEC kingpin Saudi Arabia, Iran's traditional Persian Gulf rival, has indicated a readiness to reach some sort of compromise with Tehran, the group's second largest producer. The Iranian oil source said that Iran did not feel "any pressure" and would stick to its own baseline figure.
Iran wants the sensitive issue of oil output quotas assigned after the 1990-1991 Persian Gulf crisis included in discussions on any future production cuts. "This issue needs to be in the debate," the oil source said. "the issue of Iraqi supplies needs to be discussed." OPEC producers boosted production during the 1991 Persian Gulf War to make up for lost production from Iraq, which was hit with a United Nations embargo when it invaded Kuwait. However, Saudi Arabia, which had the greatest surplus capacity, made up most of the supply gap.
Asked if Iran would compromise with the Saudis if Riyadh made any proposals, the Iranian oil source said: "this is speculation. I will not comment on this." (Reuter)
Mexico's Oil Minister Luis Tellez said on Friday after the Madrid meeting that Tehran was key to further progress on countering falling prices and that an Organization of Petroleum Exporting Countries minister would visit Iran soon to discuss production. Tellez warned that if Iran sticks to its production baseline of 3.925 million barrels per day (bpd) "it will work against the agreement reached in Madrid." The deal by the key producers trio, who masterminded two previous rounds of OPEC and non-OPEC supply curbs, has set the stage for new production cuts to battle global oversupply.
The search for further output cuts has become more urgent in a market that remained depressed despite the heaviest U.S. and British military attacks on key producer Iraq since the 1991 Persian Gulf War. The Madrid deal was a crucial step forward because it obtained the agreement of an incoming caracas government to remove from the market overproduction of more than 125,000 bpd.
Markets will now focus on Iran to see if the Islamic Republic would be open to compromise that could pave the way for further global production cuts. Iran wants OPEC to recognise 3.925 million bpd as the basis for its output reduction and any future cuts instead of the 3.623 million bpd judged by the media. National Iranian Oil Company's statistics showed peak output in March of 3.925 million though February output, the key month used by OPEC as the baseline for this year's output cuts, was lower at 3.795 million.
The Iranian oil source said Tehran was using the March figure because the 3.925 million bpd level in that month came closest to the 3.942 million bpd quota Iran was allocated in an OPEC Jakarta meeting in 1997. He said Iran was only able to fully benefit from OPEC's 1997 decision to raise its output by 10 percent in March, when its output climbed to 3.925 million bpd after gradual increases.
Harmony between OPEC rivals Saudi Arabia, Venezuela and Iran -- the cartel's giant producers -- is key to any future efforts to improve the oil market. OPEC kingpin Saudi Arabia, Iran's traditional Persian Gulf rival, has indicated a readiness to reach some sort of compromise with Tehran, the group's second largest producer. The Iranian oil source said that Iran did not feel "any pressure" and would stick to its own baseline figure.
Iran wants the sensitive issue of oil output quotas assigned after the 1990-1991 Persian Gulf crisis included in discussions on any future production cuts. "This issue needs to be in the debate," the oil source said. "the issue of Iraqi supplies needs to be discussed." OPEC producers boosted production during the 1991 Persian Gulf War to make up for lost production from Iraq, which was hit with a United Nations embargo when it invaded Kuwait. However, Saudi Arabia, which had the greatest surplus capacity, made up most of the supply gap.
Asked if Iran would compromise with the Saudis if Riyadh made any proposals, the Iranian oil source said: "this is speculation. I will not comment on this." (Reuter)