Iran is threatening to spark a global oil-price war, saying it intends to boost production no matter what OPEC does, the
Financial Times reported.
The stance threatens to foster disarray among the cartel members that were intent on keeping production targets unchanged at their meeting this week.
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Bijan Zangeneh, Iran’s oil minister, told Iranian journalists, “Under any circumstances, we will reach 4 million barrels per day even if the price of oil falls to $20 per barrel,” according to the Times. Iran currently produces 2.8 million barrels daily.
“We will not give up our rights on this issue,” Zangeneh insisted.
Iran’s display of muscle ultimately could put downward pressure on prices, and if its production hike comes to pass it could force OPEC to trim production from other members in order to avoid over-supply in world markets.
In neighboring Iraq, energy officials are also making noise about raising production by 1 million barrels per day in 2014 to 4 million barrels.
The Times predicted Saudi Arabia would likely face the most pressure to curtail production in the face of increases by Iraq and Iran, since it is the world’s largest oil exporter and has been producing at record levels of more than 10 million barrels daily.
Ali al-Naimi, the Saudi oil minister, told journalists Iran’s threat could harm more than OPEC members.
“You are preoccupied by Iran and that is not a good preoccupation,” he said. “You know what is going to happen if the price goes to $20? You know how many countries would be out of producing, including shale oil, including Canadian sands oil, including subsalt oil. All of that will be gone.”
The
Voice of America reported it is unlikely Iran or Iraq could break OPEC ranks and unilaterally raise production in a major way in the short run.
Zangeneh conceded it would take Iran about six months after current economic sanctions against the country are lifted to return to full capacity of 4 million daily barrels, the VOA said. The lifting of those sanctions is dependent on a favorable outcome in negotiations with the West on an Iranian nuclear deal.
The VOA also reported it may be overly optimistic for Iraq to elevate its own production to 4 million daily barrels because of infrastructure problems and security issues there.
“Iraq has serially failed to meet its expansion targets in recent years and this latest pronouncement stretches credibility,” said Bill Farren-Price of Petroleum Policy Intelligence, a consulting firm.
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