Most OPEC members would like to see crude prices at $70 to $80/bbl and the producer group doesn’t need to coordinate with other oil suppliers to determine output levels, Oil Minister Bijan Namdar Zanganeh said in an interview.
Oil’s slump below $40/bbl in New York last month hasn’t tempered Iran’s aims to restore output as soon as sanctions are lifted. The nation must boost crude output to regain market share even as U.S. shale producers increase drilling activity, Zanganeh said at the Petroleum Ministry in Tehran.
“Some OPEC members believed last year that lower prices could push expensive oil from the market,” Zanganeh said. “For some months we witnessed the exit of rigs from shale oil, now all of them are returning to these fields and their level of shale oil production didn’t change considerably.”
Oil has dropped by about half in the past year from more than $100/bbl in September 2014 after 12-member OPEC in December and again in June not to cut output despite a global crude glut.
Oil at $70 to $80/bbl would be “fair,” he said.
OPEC is open to coordinating its action with non-members, although it won’t wait for others to determine or approve its action, Zanganeh said. Iran, which reached an agreement in July that would remove sanctions, will boost output at any cost and expects other countries to make way for it, he said.
“OPEC will reach an agreement for managing the market, to make a balance between supply and demand,” he said. “But it seems we need some months to exchange views, to speak to each other and witness some changes in the international atmosphere.” Zanganeh didn’t say when he thought OPEC would reach a decision.
OPEC said in a bulletin from its Vienna-based secretariat on Monday that the group won’t shoulder the burden of propping up prices by cutting supply on its own, and non-member producers would have to contribute. OPEC will protect its own interests and there is “no quick fix” for market instability, it said.
Iran plans to produce 3.8 to 3.9 MMbopd by March, with output rising by 500,000 bpd soon after sanctions are lifted and by 1 million bbl within the following five months, Zanganeh said. Iran is producing 2.8 MMbpd, its highest level in three years, and is exporting more than 1 MMbpd, he said.
Iran has about 60 million bbl of condensate in floating storage and has no crude stored offshore, Zanganeh said.
“Immediately after lifting sanctions, it’s our right to return to the level of production we historically had,” Zanganeh said. “We have no other choice,” he said. A slump in oil prices won’t slow Iran’s return to the market, he said.
Iran and six global powers reached an agreement in July that would limit the Persian Gulf country’s nuclear program in return for removing sanctions on its energy and financial industries. The restrictions cut its daily oil output from 3.1 million bbl in July 2012 to as low as 2.5 million bbl in May 2013, according to data compiled by Bloomberg.