21 Jun 2017 - 12:20
Oil prices held near multi-month lows on Wednesday as investors discounted evidence of strong compliance by OPEC and non-OPEC oil producers with a deal to cut a global output.
21 Jun 2017 - 18:47
BEIRUT/LONDON: OPEC members are considering further oil output cuts but should wait until the effect of the current reduced level of production is made clear, Iran said on Wednesday, hinting at possible further OPEC action after oil sank to a seven-month low.
OPEC and allied outside producers agreed on May 25 to extend an existing supply cut into 2018, but oil has declined sharply since on rising production from the United States and Nigeria and Libya, two OPEC members exempt from cutting output.
“We are in discussions with OPEC members to prepare ourselves for a new decision,” Iranian oil minister Bijan Zanganeh said after a cabinet meeting, according to the website for the Islamic Republic of Iran Broadcasting (IRIB).
“But making decisions in this organisation is very difficult because any decision will mean production cuts for the members.”
The reason for the discussion is an increase in the levels of United States production which members of the Organization of the Petroleum Exporting Countries had not predicted, Zanganeh said.
The comment is the first hint from an OPEC minister of possible further action, although OPEC delegates downplayed the idea of a new cut, citing the difficulty of getting the exempt producers to cap output.
Nigeria and Libya are exempt from the current supply cut because of production losses caused by unrest, and Iran was given a small increase so it could recover market share lost while under Western sanctions.
“I don’t think so unless Iran would accept being included in the cut,” said one source close to OPEC, asked if the idea of a new reduction was likely to move forward.
Three other OPEC delegates in comments to Reuters dismissed the idea of a new cut.
To be sure, sources told Reuters this month that OPEC discussed cutting output further when it met on May 25 and could revisit the proposal should inventories remain high and continue to weigh on prices.
For now though, key oil ministers including Saudi Energy Minister Khalid al-Falih are of the view that the market is heading in the right direction. Russia said on June 11 there was no need to review the agreement.
(Reporting by Babak Dehghanpisheh, Alex Lawler and Rania El Gamal; editing by Jason Neely and Susan Thomas)