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Date: 3 December 2015 09:42
Baku, Azerbaijan, Dec. 2
By Umid Niayesh – Trend:
The Organization of Petroleum Exporting Countries (OPEC) is unlikely to agree on a major short-term cut in its export quotas during its upcoming meeting, Hooman Peimani, a research fellow at the Tokyo-based Asia Pacific Energy Research Center, told Trend Dec. 2.
He made the remarks answering to a question about the organization’s possible response to recent demand by Iran’s oil minister, Bijan Namdar Zanganeh.
Ahead of the OPEC meeting, which is scheduled for Dec. 4, Zanganeh asked the cartel members to reduce production by at least 1.3 million barrels per day (mbpd) down to the lowest level, which is 30 mbpd.
Peimani believes that Iran’s demand wouldn’t receive an appropriate response by many at the organization.
“This is hardly possible, as all the OPEC members have strong reasons to preserve their current quota and thus market share,” he said.
The expert added that the Persian Gulf’s Arab countries – Kuwait, Saudi Arabia, UAE and Qatar, which are OPEC members, are highly unlikely to accept Iran’s request given their worsening ties with Tehran over Iraq, Syria and Yemen.
Peimani, however, noted that Venezuela, Ecuador and Algeria could accept Iran’s request, taking into account their friendly ties with Tehran.
Tehran has noted on various occasions that it doesn’t need permission to increase its oil production after the sanctions on the country are lifted.
Commenting on Tehran’s response in case if the OPEC members don’t cut their output, Peimani said possibly Iran would increase its output anyway once the sanctions are lifted, but, if so, it would also likely seek support of the members with good ties with the Islamic Republic, namely, Venezuela, Ecuador, Nigeria and Algeria, as it doesn’t want to antagonize the entire members and push all of them to the Saudi-led anti-Iranian camp.
By holding 157 billion barrels of recoverable crude oil reserves, Iran possesses the world’s fourth largest reserves of crude oil.
Iran’s current oil production is estimated to be around 2.8 million barrels per day, of which about one million barrels are exported.
Tehran once was OPEC’s second-biggest producer and now stands at the fourth place.
Peimani, further commenting on the cooperation between OPEC and non-OPEC countries, said major non-OPEC oil exporters, including Russia, have implicitly followed OPEC decisions over oil pricing in most cases, given their stakes in higher oil prices over time.
“Hence, implicit and also explicit cooperation between the OPEC and non-OPEC oil exporting countries is quite possible now, given the damaging impact of the lowering oil prices on all the oil-exporters’ revenues,” he explained.
He further touched upon the speculations about Indonesia’s re-joining the cartel, saying the country is currently a net importer of oil.
“Its return to OPEC as a major oil exporter will demand it to put a major investment in its undeveloped reserves discovered over the last 10 years or so, which is yet to happen,” Peimani said, adding that Indonesia isn’t likely to re-join OPEC as a major exporter capable of affecting oil markets, given its current limited export capability.
The expert further commented on the recent oil price fluctuations, dismissing any direct link between them and the upcoming OPEC meeting.
“There is a wide range of factors affecting oil prices - one of them is OPEC’s decisions agreed by its members,” noted Peimani.
He added that any OPEC decision to maintain its current exports and/or increase or decrease substantially its exports will certainly have an impact on oil prices.
“However, the OPEC members are unlikely to agree on major cuts in their export quotas in the short-term,” he said, adding that hence the ongoing fluctuations aren’t due to OPEC’s upcoming meeting only.
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