OPEC has no immediate plan to cut its output target for crude, and Iran is strong enough to withstand a deeper slump in prices even if the country must sell at $25 a barrel, Oil Minister Bijan Namdar Zanganeh said.
“If the oil prices drop to $25 a barrel, there will yet again be no threat posed to Iran’s oil industry,” Zanganeh told reporters on Jan. 19 at a conference in Tehran, according to the state-run Fars news agency.
Brent crude traded below $49 in London on Jan. 19. Oil has fallen more than 30 percent since the Organization of Petroleum Exporting Countries decided on Nov. 27 to keep its ceiling unchanged at 30 million barrels a day. Iran isn’t seeking for OPEC to hold an emergency meeting, Zanganeh said. The group is scheduled to meet next on June 5.
Iran together with Venezuela has called for OPEC, which supplies about 40 percent of the world’s oil, to work together to support a recovery in crude. The U.S. shale boom has contributed to a global glut, and Qatar and the United Arab Emirates estimate the oversupply at about 2 million barrels a day. Iran is hobbled by international sanctions over its nuclear program and struggling for market share.
Brent crude, a benchmark for more than half of the world’s oil, has slid 15 percent this month and was 39 cents lower at $48.54 a barrel at 7:24 a.m. London time on Tuesday. Oil fell almost 50 percent last year, the most since the 2008 financial crisis.
Iran is consulting with its fellow OPEC members to respond to the collapse, Zanganeh said, without providing details. As of yet, OPEC has made no decision to reduce its production ceiling, he said.
Upheaval in oil markets is the result of politics and decisions by producer countries, Zanganeh said, declining to be more specific.
Saudi Arabia’s oil minister, Ali al-Naimi, said last month it was “irrelevant” whether crude fell as low as $20 a barrel, Middle East Economic Survey reported Dec. 22. U.A.E. Energy Minister Suhail Al-Mazrouei said in Abu Dhabi on Jan. 19 that sustainable development in the petroleum industry cannot be achieved at current prices.
Iran is lowering the crude price assumed for this year’s budget to $40 a barrel, from $72, Fars reported Finance and Economy Minister Ali Tayebnia as saying Jan. 15. The Persian Gulf nation pumped 2.8 million barrels a day of oil in December, down from an average of 3.6 million in 2011, according to data compiled by Bloomberg.
OPEC members and non-OPEC producers must cooperate “to generate investment in the oil industry,” Zanganeh said. “This will bring about desired conditions for both producers and consumers.”