Current crude prices at about $68 a barrel are unsustainable and will rise to $80 by the end of next year as U.S. supply slows, Iran’s deputy oil minister said.
“From a commercial point of view, we believe today’s price is not sustainable,” Roknoddin Javadi, who is also managing director of state-run National Iranian Oil Co., said Thursday at a news conference in Tehran. “Based on trends and information we have and what’s happening in the U.S. drilling sector and consequences for the related industry, our expectation is that by the end of 2016 we can see this figure of $80.”
Javadi’s remarks reinforced comments from Oil Minister Bijan Namdar Zanganeh, who told reporters in Tehran on Wednesday that no one is happy with current prices and would instead by “very satisfied” to see oil trading in a range of $70 to $75. North Sea Brent crude, an international benchmark, fell 16 cents to $65.38 a barrel on the London-based ICE Futures Europe exchange at 12 p.m. Singapore time.
Oil has rebounded about 50 percent from a six-year low in January as drillers in the U.S. reduced the number of active rigs to the fewest since September 2010, slowing production. Iran, the fifth-biggest producer in the Organization of Petroleum Exporting Countries, pumped 2.78 million barrels a day in April, according to data compiled by Bloomberg.
Iran’s exports have dropped more than 60 percent because of sanctions that the UN, U.S. and European Union have imposed over its nuclear program, Zanganeh said. Nuclear talks are to resume May 12 in Vienna with a deadline for an agreement by June 30.
“Financial and oil sanctions all need to be lifted,” Zanganeh said Thursday at a conference in Berlin.
Iran has been stockpiling oil in supertankers in the Persian Gulf, data compiled by Bloomberg show. While estimates vary from as little as 7 million barrels to 35 million barrels, Barclays Plc and Societe Generale SA predict this crude would be first to be sold abroad if there’s an agreement on Iran’s nuclear program.
“We don’t have very much oil in floating storage -- as much as operationally needed,” Javadi said, without giving details.
Iran’s oil output capacity will rise to 3.96 million barrels a day by next March from 3.8 million in March this year, he said. “Our most important job this year is securing financing for development projects, for which the parliament has allocated $100 billion.”