Kuwait: Market Can't Take Increased Iranian Oil Production

Khaled Jarallah, deputy foreign minister for Kuwait, says "Iran should learn from the market"

Market participants Monday were faced with more bearish sentiment to consider among the growing number of bulls, with Kuwait the latest voice warning of an imminent collapse in prices, as persistently rising crude prices continued to push Ship & Bunker's IFO380 Global Average Bunker Price to near 6 month highs.

Going where many nations have gone before, Kuwait is asking Iran to participate in a second proposed oil production freeze because the market can’t take the excess anymore, local media reported. 

In speaking with state news agency KUNA, Khaled Jarallah, deputy foreign minister for Kuwait, said, "Iran should learn from the market: the market does not give an opportunity to increase production.

“There is no choice but to freeze production.”

The first proposal, highly criticized by analysts as an empty gesture, was shot down in Doha last month when Saudi Arabia, as part of a meeting between Organization of the Petroleum Exporting Countries (OPEC) members and non-members, refused to consider freezing output because Iran had no intention of going along with the scheme. 

It is unclear whether Jarallah was motivated by recent signals that Iran may be considering participating in a second wave of talks: after disclosing that at 3.7 million barrels per day his country has returned production to pre-sanctions levels, Rokneddin Javadi, deputy oil minister for the Islamic republic, said, “I believe the next OPEC meeting will be a better meeting with more coordination."

But Iran’s position on more talks, which many think will be part of the upcoming OPEC meeting itinerary in Vienna, vacillates wildly: last week, Bijan Zangeneh minister of petroleum for Iran, said his country will join the “voluntary act of self-sanctioning” only when its output reaches four million barrels per day (he also blamed Saudi Arabia for oil prices dropping from $100 per barrel to around $45 per barrel now).

Amir Hossein Zamaninia, deputy oil minister for international affairs for Iran, has also stated that many other issues, such as conflicts in Yemen and Syria, have to be resolved before any bi-lateral talks can be considered.