According to sources close to the Organization of the Petroleum Exporting Countries (OPEC), the cartel is getting closer to finalizing an agreement that will put a freeze on crude production for the first time in eight years, and most members are prepared to grant concessions to the only country that is holding up the deal, Iran.
Tehran has been suffering from decreased capital inflow since Western sanctions started, but the restrictions were eased at the start of this year. However, the second largest Middle-East oil producer wants an exemption from the OPEC output cap in order for the country to continue its recovery.
Some of the larger crude producing nations in OPEC, including Saudi Arabia, feels Iran is already running at full capacity and that giving only them concessions would be unfair.
Gulf sources previously reported that OPEC asked Tehran to cap its production at 3.7 million barrels per day, but the Iranians put forward a figure of between 3.9 and 4.3 million bpd. At the sidelines of a gas forum in Doha last week, OPEC eventually offered an updated figure of 3.8 million bpd but have yet to receive a reply from the Iranian energy minister Bijan Zanganeh.
The Islamic republic is currently producing around 3.9 million bpd, so the latest OPEC offer would not give the country much room for growth while restrictions are in place.
Interested parties are hoping OPEC can come to some form of agreement soon, and all eyes will be on its next official meeting in Vienna at the end of the month.
Saudi Arabia's Khalid al-Falih said the gas forum meeting went as expected but declined to comment further.
“A fast conclusion to this saga would be beneficial to the OPEC nations because they would then be able to involve some of the bigger oil producing countries who are not part of the group, like Russia,” said Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management in a phone interview for Reuters.
“The Kremlin has been very positive about supporting the output cap but their interest could dwindle if disagreements and infighting continue,” Poulson continued.
Alexander Novak, Russian Energy Minister, mentioned at last week’s meeting that many non-OPEC nations would be interested in taking pro-active measures to manage issues in the world’s oil market.
