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Iran: There are no guarantees with OPEC

Iran is the only party to a production agreement not obligated to curb its oil output.

By
Daniel J. Graeber
Iranian Oil Minister Bijan Zanganeh says there are no guarantees with OPEC. His comments follow word of an oil production increase in Iran. File photo by Maryam Rahmanian/UPI
Iranian Oil Minister Bijan Zanganeh says there are no guarantees with OPEC. His comments follow word of an oil production increase in Iran. File photo by Maryam Rahmanian/UPI | License Photo

TEHRAN, Dec. 28 (UPI) -- Following an announcement regarding an increase in oil production, Iran's oil minister said there are no guarantees an OPEC production ceiling will be enforced.

Iran is the only party not obligated to a production cut under a late November decision from the Organization of Petroleum Exporting Countries. Under the terms of the deal, Iran can produce around 3.8 million barrels per day.

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Iran lobbied that it needed freedom to regain a market share lost to international economic sanctions imposed in response to its controversial nuclear program. A multilateral agreement last year eased sanctions on Iran after it agreed to scale back the program.

By his account, Iranian Oil Minister Bijan Zangeneh said that, in terms of the OPEC agreement, most deals have fallen short of design.

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"Though there is no guarantee that OPEC decisions will be enforced," he was quoted as saying by the ministry's news website SHANA.

The OPEC move relies on part on production cuts from non-member states, with Russia accounting for the bulk of the expected declines. Economists with Societe Generale said Russia has a poor track record when it comes to managed declines, but said personal investment in the cut from President Vladimir Putin could indicate a willingness to cooperate.

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Much of the managed decline from OPEC would come from Saudi Arabia, which has outlined efforts to add more non-oil revenue to its economy. Iran and Saudi Arabia are historic rivals and Zangeneh said competition among member states was fierce.

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"While competing, we do have engagement," he added. "We do notice that through engagement and commonalities, we can reach successful results in many occasions."

His comments followed word from Hamid Bovard, the managing director of the Iranian Offshore Oil Co., that production was on pace to increase next year.

"Some 30,000 to 60,000 barrels increase in daily production is on agenda," he told SHANA.

Secondary sources told OPEC that Iran produced around 3.7 million bpd last month, relatively unchanged from October.

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