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Iran Gives Cautious Nod to Oil Deal as Bargaining Starts

Source: Reuters 9/6/2016, Location: Asia

Iran signalled it was prepared to work with Saudi Arabia and Russia to prop up oil prices as Tehran began to bargain with OPEC on possible exemptions from output limits.

Iran has been the main factor preventing an output deal between OPEC and non-OPEC Russia as Tehran argued it should be excluded from any such agreement before its production recovers from Western sanctions that ended in January.

Iran's rival Saudi Arabia has said it would agree to a deal only if Tehran took part. However, with Iranian production rising close to pre-sanctions levels, Riyadh has signalled in recent weeks it is ready to compromise.

Russia has also said it was ready to accept certain exemptions, especially as Iran was close to reaching output levels of 4 million barrels per day (bpd) after which it could no longer boost production further.

On Monday, Russia and Saudi Arabia signed a pact agreeing to work together to help balance the oil market but giving little detail on possible action to help eradicate a global glut.

On Tuesday, Iranian Oil Minister Bijan Zanganeh met OPEC Secretary-General Mohammed Barkindo in Tehran and said he would support any measure to stabilise crude prices at around $50-60 per barrel.

"Iran wants a stable market and therefore any measure that helps the stabilisation of the oil market is supported by Iran," Zanganeh said.

OPEC members will meet on the sidelines of the International Energy Forum (IEF), which groups producers and consumers, in Algeria on Sept. 26-28, during which they are expected to discuss a possible output freeze.

Russia is also expected to attend the IEF.

Hit by global oversupply, oil prices collapsed to as low as $27 per barrel earlier this year from as high as $115 in mid-2014, but have since recovered to around $47.

"We support oil prices between $50 and $60 per barrel," Zanganeh said.

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