Iran plans to raise oil production “at any cost” to defend the country’s market share and backs calls for an emergency OPEC meeting to help shore up crude prices.
“We will be raising our oil production at any cost and we have no other alternative,” said Oil Minister Bijan Namdar Zanganeh, according to his ministry’s news website Shana. “If Iran’s oil production hike is not done promptly, we will be losing our market share permanently.”
Iran had the second-biggest output in the Organization of Petroleum Exporting Countries before U.S.-led sanctions banning the purchase, transport, finance and insuring of its crude began July 2012. Oil producers such as BP Plc and Royal Dutch Shell Plc have expressed interest in developing the country’s reserves, the world’s fourth-biggest, once sanctions are removed.
Brent crude slid below $45 a barrel for the first time since March 2009, falling as much as 3.2 percent to $44 a barrel on the ICE Futures Europe exchange in London. Prices have dropped 23 percent this year, prompting hedge funds to cut bullish bets to a five-year low.
Zanganeh was speaking during the first visit by a British foreign secretary to Iran since 2003. Philip Hammond was accompanied by officials from Shell and BP as he reopened the U.K. embassy, four years after it was shut following a mob attack, marking the improvement in relations since July’s nuclear accord.
Shell will pay $2.3 billion owed to Iran “immediately” after the restrictions are lifted, Zanganeh said. Shell has consistently said that once sanctions are lifted, it will repay the debt, a company spokesman said.
BP was one of the “good customers” of Iran’s crude before the sanctions and is also expected to take measures to buy Iranian oil in the future, Zanganeh said, according to Shana.
Iran backed calls for an emergency OPEC meeting to be held earlier than the oil producing group’s next session on Dec. 4.
“Iran endorses an emergency OPEC meeting,” Zanganeh said. A meeting would “be effective” in halting oil’s decline, he said.
OPEC is pumping at near record levels, even amid a global glut of crude. Algeria wrote to others in the 12-member group saying they should consider measures for reviving oil prices and stabilizing the market, two delegates familiar with the request said last week.
Algeria’s initiative to coordinate an OPEC response to tumbling crude prices had the backing of cash-strapped fellow members Libya and Venezuela. It was met with no public response from OPEC’s top producer Saudi Arabia, which led the group’s decision to maintain its crude output target unchanged at 30 million barrels a day to preserve market share amid rising production from the U.S. to Russia.
OPEC produced 32.1 million barrels a day of crude in July. Saudi Arabia is set to continue pumping near current levels of about 10 million barrels a day this year and next, Barclays Plc analysts, including Miswin Mahesh, wrote in a report Aug. 21.
Zanganeh has said that other OPEC members should make room for Iran when it raises output after sanctions are lifted as a result of last month’s nuclear pact with world powers. Iran pumped 2.85 million barrels a day in July, down from 3.6 million at the end of 2011, data compiled by Bloomberg show.