Iranian Oil Minister Bijan Zanganeh says oil prices could rally as much as 25 percent if OPEC members agree on a production arrangement by the end of the month. File Photo by Maryam Rahmanian/UPI | License Photo
TEHRAN, Nov. 21 (UPI) -- OPEC members are shooting for crude oil priced at around $60 per barrel if production agreements come through, Iran's oil minister said.
Iranian Oil Minister Bijan Zangeneh met during the weekend in Tehran with Mohammad Sanusi Barkindo, the secretary general of the Organization of Petroleum Exporting Countries, of which Iran is a member. Both sides discussed the prospects of upholding a production ceiling proposed in September in Algeria and, if it's formalized, Iran's oil minister said crude oil prices could rally up to 25 percent.
"OPEC members have considered a price range of $55 to $60 [per barrel]," he was quoted by the Oil Ministry's news website SHANA as saying.
The price for Brent crude oil was moving near $48 per barrel in pre-market trading Monday, a rebound of around 60 percent from its low point for the year.
OPEC members are working to build consensus around an agreement to hold output at around 32.5 million barrels per day, the low end of the proposal offered from Algeria. OPEC last reported that its 14 members produced a combined average of 33.6 million barrels per day, above the high end of the Algerian proposal.
U.S. shale oil production in part pushed the market toward the supply side, which dragged oil prices below $30 per barrel. Several companies with a strong portfolio in U.S. shale were forced to cut back on spending and payrolls in response and Zangeneh said even rival producers want to see the market recovery.
"Even Western countries expect higher prices in the market than the current levels in order to step out of recession," he said. "They are all worried about the fall in investments in the oil industry in recent years; a process that has negatively influenced the oil market."
The Iranian minister said it was likely that OPEC members could agree on formal terms of an agreement when they meet next on Nov. 30. Any rally that followed a formal agreement would likely boost confidence in U.S. shale markets, potentially increase production there and add even more oil to an already oversupplied market.
Speaking to The Financial Times, former Saudi Oil Minister Ali al-Naimi raised questions about OPEC's strategy to put a floor under crude oil prices.
"I have no idea why they want a reversal because a high price will definitely bring more crude to the market and OPEC will further lose [market] share," he said.