Iran Calls on Oil States to Cut Excess Crude: OPEC Reality Check

  • Plea echoes letter from government before last meeting in June
  • Most members unable to balance budgets if output quota is kept

As OPEC ministers started to arrive in Vienna, Iran called on fellow members to comply with the group’s production ceiling before ramping up its own supply next year.

The appeal from Oil Minister Bijan Namdar Zanganeh, reported by Mehr news agency just days before the Organization of Petroleum Exporting Countries meets to discuss output quotas, echoes a letter he presented to ministers at the group’s last meeting in June.

OPEC pumped 32.1 million barrels a day in November, exceeding its 30 million-barrel quota for an 18th month, according to a Bloomberg survey of companies and analysts. Iran has said it plans to pump an additional 500,000 barrels a day once international sanctions over its nuclear program are lifted.

Ministers are expected to decide against cutting production on Dec. 4 even as crude prices languish near a three-month low. That will leave most OPEC members unable to balance their budgets, with only Qatar able to do so if Brent crude averages $57.50 a barrel next year, as forecast.

Saudi Oil Minister Ali al-Naimi refused to be drawn on the likely outcome of Friday’s meeting as he arrived in Vienna on Tuesday, saying only that Saudi Arabia will listen to everyone before a decision is made.

Following are the latest comments from OPEC members and analysts. The respective shares of supply are based on October levels. The estimates for the price that each member needs to balance its budget are from the International Monetary Fund unless stated otherwise.

ALGERIA

  • Price needed: $96
  • Share of OPEC production: 3.4 percent
  • Algeria’s efforts to organize an emergency OPEC meeting in August failed to bear fruit while its calls for non-OPEC members to cut output weren’t heeded. Algeria has backed Venezuela’s motion to hold a summit of OPEC and non-OPEC producers to boost prices.

ANGOLA

  • Price needed: $90 (ING Bank data)
  • Share of OPEC production: 5.6 percent
  • Angola’s oil exports are heavily dependent on China. The African nation became China’s second-biggest crude supplier in October, according to customs data. Any slowdown in the Chinese economy could make the outlook for Angola’s exports more uncertain.

ECUADOR

  • Price needed: $120 (ING)
  • Share of OPEC production: 1.7 percent
  • President Rafael Correa has suggested that cutting OPEC’s annual output by 1.6 percent would be enough to boost prices “significantly.” New Oil Minister Carlos Pareja, who arrived in Vienna on Monday, expects crude prices to improve next year.

IRAN

  • Price needed: $87
  • Share of OPEC production: 8.4 percent
  • Iran, OPEC’s second-biggest producer before sanctions were tightened in 2012, plans to raise output by 500,000 barrels a day within a week of restrictions being removed and by 1 million barrels a day within six months. The country, which now ranks as the fifth-largest producer, has said OPEC should make room for that increase within its ceiling of 30 million barrels a day.

IRAQ

  • Price needed: $81
  • Share of OPEC production: 13 percent
  • Iraq pumped a record 4.4 million barrels a day in June and its daily production has surpassed 4 million barrels for the past six months. Together with the U.S., it’s responsible for most of the global surplus this year. That’s unlikely to persist in 2016, according to industry forecasters: Iraq is struggling with prices below $50 and is embroiled in a “costly battle” with Islamic State militants, the International Energy Agency said last month. Even its oil minister expects production growth to slow next year.

KUWAIT

  • Price needed: $67
  • Share of OPEC production: 8.7 percent
  • Kuwait is in the strongest position to weather a prolonged period of low oil prices thanks to its current-account surplus, according to Capital Economics Ltd. The country, along with other Persian Gulf members of OPEC, opposed Venezuela’s proposal for an oil-price summit with non-OPEC producers, the Wall Street Journal reported.

LIBYA

  • Price needed: $269
  • Share of OPEC production: 1.3 percent
  • OPEC’s smallest producer, Libya has been unable to restore output to the 1.6 million barrel-a-day level it reached before the Arab Spring in 2011. Production has swung between 250,000 and 850,000 barrels a day in the past year amid an escalating conflict between the divided country’s rival governments. Libya is one of OPEC’s “Fragile Five” nations that face greater risk of significant instability and output disruptions in the current oil market, according to RBC Capital Markets Ltd.

NIGERIA

  • Price needed: $120 (ING)
  • Share of OPEC production: 6.3 percent
  • Nigeria’s Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu has said oil at $40 isn’t acceptable and OPEC needs to do more to enforce production quotas. The country would consider $60 a barrel more “tolerable,” he said Nov. 21.

QATAR

  • Price needed: $55.50
  • Share of OPEC production: 2 percent
  • Among OPEC, Qatar boasts the lowest fiscal break-even oil price to balance its budget. That’s still about $10 above current prices. Energy Minister Mohammed Al Sada has said there are signs of a market recovery next year as non-OPEC supply growth is set to slow.

SAUDI ARABIA

  • Price needed: $106
  • Share of OPEC production: 32 percent
  • Saudi Arabia has boosted output in nine of the past 11 months as OPEC’s biggest producer keeps its strategy of defending market share. The nation pumped a record 10.6 million barrels a day in July. Yet it’s not immune to the slump in prices. Despite having a war chest of $647 billion of foreign-exchange reserves, its credit rating was cut by Standard & Poor’s in October on concern the country’s reliance on energy exports for 80 percent of revenue will drive up the budget deficit.

UNITED ARAB EMIRATES

  • Price needed: $73
  • Share of OPEC production: 9.2 percent
  • The U.A.E.’s oil minister, Suhail Al Mazrouei, said Nov. 18 that OPEC shouldn’t be considered a swing producer but rather a steady, low-cost supplier. Mazrouei also said last month he expects a “gradual correction” in prices next year.

VENEZUELA

  • Price needed: $125 (ING)
  • Share of OPEC production: 7.8 percent
  • Venezuelan Oil Minister Eulogio del Pino has urged OPEC to adopt an “equilibrium price” of $88 a barrel that covers the cost of new investment in production capacity, or risk prices dropping to the mid-$20s. Venezuela depends on crude for 95 percent of its export revenue, which is why its bond traders keep a close eye on oil prices.
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