EMEA News
Oil Deal "In Flames" as Iran Dismisses Output Freeze as "Ridiculous"
"Ridiculous" is Iran's descriptive in response to the proposal by Saudi Arabia, Russia, Qatar, and Venezuela to freeze oil production – whose feasibility was dependent on the cooperation of other Organization of the Petroleum Exporting Countries (OPEC) members, media reports.
Bijan Namdar Zanganeh, oil minister for the Islamic Republic, told the Shana news agency that the proposed cap at January levels – which analysts said was woefully inadequate in correcting the global market imbalance – puts "unrealistic demands" on his nation.
He said, "It is very ridiculous, they come up with the proposal on freezing oil production and call for this freeze to take place in their 10 million barrels a day production vis-a-vis Iran's 1 million barrels a day" planned production boost.
He added, "If Iran's crude oil production falls, it will be overtaken considerably by the neighbouring countries."
Iran intends to boost daily production by 600,000 barrels to 3.6 million barrels per day by the middle of this year, a move the International Energy Agency says will balance the decline in U.S. production but critics decry as exacerbating a product glut that has reached crisis levels.
Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, remarked that "This deal was never going to be plain sailing, but these comments shoot it down in flames."
Zanganeh made his declaration just before Ali al-Naimi, oil minister for Saudi Arabia, told the IHS CERAWeek conference in Houston that the freeze would only occur if other producers joined in; he later admitted this was an unlikely scenario and that high-cost producers will have to "lower costs, borrow or liquidate" to cope with the slump in oil prices.
Zanganeh's comments are an about-face from supportive remarks he made on February 17 that the proposed freeze "Is the first step and other steps should also be taken."
