June 21 (UPI) -- The political element of the oil market needs to be diminished in favor of market fundamentals, the Iranian oil minister said at OPEC's conference in Vienna.
"I would like to reiterate that, in our view, de-politicizing the oil market is vital for market stability and its stakeholders," Iranian Oil Minister Bijan Zanganeh.
His remarks were published by SHANA, the Iranian oil ministry's news website.
Ministers from the Organization of Petroleum Exporting Countries are in Vienna this week reviewing a multilateral effort to drain the supply overhang that pushed oil prices below $30 per barrel in early 2016. Saudi Arabia and Russia, the largest non-OPEC contributor to the effort, have suggested more oil could show up on the market to balance steady losses from Venezuela and potential losses of Iranian barrels to U.S. sanctions.
Higher oil prices could create headwinds for the global economy. Those higher prices, meanwhile, translated to gasoline price spikes in the U.S. market, diminishing the impact of Trump's tax reform.
Zanganeh said he objected to higher oil prices, saying they offered producers and consumers alike few long-term benefits. On recent price levels, the minister said most of the increases were in response to political tensions. From Trump, the May 8 decision to leave the U.N.-backed nuclear agreement that offered sanctions relief to Iran was the main culprit.
"You cannot have your cake and eat it too," the minister said of the U.S. administration. "You cannot impose unilateral trade sanctions against two founding members of OPEC [Iran and Venezuela] -- two major oil producers -- and apply them extra-territorially, and at the same time expect the global oil market not to show adverse reaction."
Venezuelan production is hobbled by growing isolation for President Nicolas Maduro, as well as U.S. sanctions pressures. Iran's output is relatively stable and won't be impacted by U.S. sanctions directly until November.
Crude oil price fluctuations have been impacted as well by lingering trade tensions, particularly between China and the United States, two of the world's largest economies.
In January, after Brent crude oil prices closed above $70 per barrel for the first time in four years, Russian Energy Minister Alexander Novak said it wasn't price, but the balance between supply and demand, that influenced producer decisions.
The five-year average in crude oil inventories held by the world's leading industrialized economies is close to balance. That means, however, there's little room for shocks like Venezuelan shortages, problems in Libya or the potential loss from Iran.
Joe McMonigle, a senior energy analyst at Hedgeye Risk Management, told UPI from the sidelines of the OPEC conference that, after a rough start to the week, it seemed OPEC ministers were coming to terms on some sort of coordinated agreement.
"There seems very little risk of OPEC failure to reach consensus about adding some new production," he said.