OPEC Asks Iran to Cap Production at 3.92 Million bpd in Bid to Ensure Cutback Deal Success

OPEC reportedly wants Iran to cap its oil production at 3.92 million

Several Organization of the Petroleum Exporting Countries (OPEC) members on Friday were reported to have met with Iranian officials to persuade the Islamic republic to cap its oil production at 3.92 million barrels per day (bpd) – and avoid the cartel's global production cutback deal from collapsing later this month in Vienna.

OPEC had reportedly originally hoped for Iran to cap output at its current level of 3.6-3.7 million bpd, but Tehran has steadfastly refused to consider any restrictions until it reaches its pre-sanctions production level of between 4.0 and 4.2 million bpd.

The meeting, which took place on the sidelines of a gas forum in Doha, was attended by several undisclosed OPEC oil ministers and Khalid Al-Falih, oil minister for Saudi Arabia, as well as Iranian officials – but not Bijan Zanganeh, that country's oil minister.

The Islamic republic has not yet responded to the proposal, but Iran's OPEC governor, who attended the meeting, said he was optimistic that the cartel would ratify the deal on November 30.

Alexander Novak, energy minister for Russia, was also present at the meeting and said that if an agreement is reached, his country is ready to cap output for six months or longer; he added that it might compel other non-OPEC members to join the pact.

Strangely absent from reports of OPEC strategies leading up to Vienna is the usual chorus of analysts who have astutely pointed out that the cartel's objective to reduce output from 33.24 million bpd to 32.5 million bpd is a mere drop in the bucket compared to the record volumes being pumped by members: earlier this month, BK Namdeo, head of refineries at Hindustan Petroleum Corp Ltd., called the cut "not a very appreciable amount."

Tariq Zahir, trader in crude oil spreads at Tyche Capital Advisors, pointed out in August that with Saudi production and "the U.S. rig count coming back online for several weeks, even if a freeze did happen we would be talking about freezing at higher levels of output."