The Organization of Petroleum Exporting Countries (OPEC) will be able to “coordinate itself” to accommodate Iran’s return to oil markets without causing a price crash, Bijan Zanganeh, Iran’s oil minister, said on Thursday during a visit to Beijing.
Iran, once the No.2 exporter of OPEC, hopes to boost its exports by as much as one million barrels per day (bpd) in just two months if a final agreement is reached with world powers on its nuclear program and sanctions are lifted.
But with oil markets still oversupplied, OPEC members should discuss crude production levels before the group’s next meeting in June, Zanganeh said.
“It seems [OPEC’s strategy of not cutting output] does not work well, because prices are coming down,” Zanganeh said. “We haven’t witnessed stable situations on the market.”
Benchmark oil prices are running more than 50 percent lower than in June last year, partly because OPEC has followed Saudi Arabia’s lead in refusing to cut output to shore up crude markets.
Zanganeh arrived in Beijing just one week after Tehran and the world powers reached an initial framework nuclear deal to discuss oil sales and Chinese investments in Iran. It’s his first visit to Beijing since taking on his current role two years ago.
Higher sales to China, Iran’s biggest oil client and trade partner, would likely be in the cards with any lifting of sanctions. Iran also hopes to resolve differences with Chinese energy companies on oil and gas projects in the Islamic republic, so that production can be ramped up again quickly.
Iran’s oil exports have been cut by more than half to around 1.1 million bpd from a pre-2012 level of 2.5 million bpd, with the loss of oil income making it difficult to invest in new development and pay for the equipment and services needed to keep its production operating smoothly.