OPEC Will Have To Accommodate For The Iranian Return To The Market
OPEC, the Organization of Petroleum Exporting Countries, will manage to coordinate itself in order to accommodate the return of Iran to the oil markets. Bijan Zanganeh, the Minister of Oil of Iran said in Beijing on Thursday, that the accommodation of OPEC will prevent the price crash.
Iran used to be second only to Saudi Arabia in the OPEC, expects to enhance the crude oil export to a million barrels per day, only 60 days after the deal lifting the embargo is signed. The framework of the nuclear program agreement has already been accepted.
Zanganeh stated that “It seems [OPEC’s strategy of not cutting output] does not work well, because prices are coming down,” adding that “We haven’t witnessed stable situations on the market.”
The current crude oil prices are at 50% of the prices last June, mostly because the OPEC accepted the strategy of Saudi Arabia, which refused to diminish the oil output, in order to secure the better market position.
The Iranian Minister of Oil is visiting Beijing, only a week after the initial framework deal has been reached between his country and the officials of the 5 + 1 world powers. Zanganeh is discussing the investments in Iran from China, and crude oil sale the leading Asian economy. This is the first time that Zanganeh has visited Chine, ever since he became the Minister of Oil, two years ago.
Iran’s arguments in the embargo lifting dynamics will be stronger with higher oil export to Chine, the country’s largest client and trade partner. The export levels of 2.5 million barrels a day, before 2012, have been cut in half, and Iran is currently exporting roughly 1.1 million barrels per day.