Iran: Stabilization of Oil Production Until Return to Pre-Sanction Levels Is Off the Table

Mehdi Hosseini, head of the Oil Contracts Review Committee, announced on Thursday, April 21, that Iran will not freeze its oil production until it returns to pre-sanction levels. According to the Associated Press, he stated that a daily production of 4.2 million barrels of oil is on the agenda of Iranian officials. Hosseini's remarks come after last week's meeting of OPEC members and some non-OPEC oil producers in Doha failed to stabilize oil production. Saudi Arabia, which accounts for one-third of OPEC's oil production and 11% of total global oil production, claims that Iran must halt its oil production increase plans. Following the failure of the Doha meeting, Bijan Namdar Zangeneh, Iran's Minister of Oil, stated that if Iran were to stabilize oil production at January levels, it would mean that nothing has changed regarding the lifting of sanctions. Hosseini also stated in Paris that any stabilization of production below 4.2 million barrels per day would mean the continuation of sanctions against Iran. After the imposition of Western sanctions in 2012, Iran's oil exports decreased by over one million barrels, and its daily oil production also fell by the same amount. Iran's oil production last year was about 2.8 million barrels per day, but after the lifting of sanctions in mid-January this year, this figure increased to 3.3 million barrels. Hosseini remarked at an oil conference in France that any stabilization would mean 'self-sanctioning.' According to IRNA, Roknoddin Javadi, CEO of the National Iranian Oil Company, also stated on April 20 that the production of the National Iranian South Oil Company is expected to reach 3 million barrels per day by the end of June, which would bring Iran's total oil production back to pre-sanction levels. International oil markets were saturated following the production of a massive surplus of oil in the second half of 2014, and last year, up to 1.7 million barrels of surplus oil were entering the market daily. This caused oil prices to drop from $108 to below $30 last month. However, the decrease in oil production by non-OPEC members has reduced the surplus, and global oil prices have risen to around $45. According to the International Energy Agency's assessment, non-OPEC oil production will decrease by 700,000 barrels per day this year, but there will still be a surplus of oil in the market. OPEC members and some other producers, such as Russia, held a meeting on April 17 to stabilize their oil production at January levels. Iran refrained from participating in this meeting but stated that it supports the stabilization of production by other countries. Reuters reported on Thursday that Algeria wants to initiate a new round of negotiations to stabilize production with Russia, Iran, and other countries.