Iran signalled on Wednesday it could compromise on a small increase in OPEC oil output when the group meets this week, as Saudi Arabia scrambled to convince fellow members on the need for a larger rise in production.
The Organization of the Petroleum Exporting Countries meets on Friday to decide on output policy amid calls from major consumers such as the United States and China to cool down oil prices and support the global economy by producing more crude.
Iran said on Tuesday OPEC was unlikely to reach a deal, setting the stage for a clash with kingpin Saudi Arabia and non-member Russia, which are pushing to raise production steeply from July to meet growing global demand.
But on Wednesday, Iranian oil minister Bijan Zanganeh said OPEC members that had overdelivered on cuts in recent months should return to compliance with agreed quotas.
That would effectively mean a modest boost from producers such as Saudi Arabia, which have been cutting more deeply than planned despite production outages in Venezuela and Libya.
“OPEC could keep the same deal with compliance going back to 100 per cent,” said an OPEC source who is aware of Iran’s stance.
OPEC Secretary-General Mohammad Barkindo said he was confident there would be a deal on Friday.
Russia has proposed OPEC and non-OPEC raise output by 1.5 million barrels per day (bpd.), effectively wiping out existing production cuts of 1.8 million bpd. that have helped rebalance the market in the past 18 months and lifted oil to $75 per barrel. Oil was trading as low as $27 in 2016.
OPEC members Iran, Iraq and Venezuela have opposed a relaxation of production cuts, fearing a slump in prices.
But a decision to increase output could be taken with Iran refusing to sign up, as has happened before in OPEC.
Iran has so far been the main barrier to a deal, with Zanganeh saying on Wednesday OPEC should not yield to pressure from U.S. President Donald Trump to raise output.
He said Trump had contributed to the rise in prices by imposing sanctions on OPEC members Iran and Venezuela, which will likely lead to lower exports.
Zanganeh said he would leave Vienna on Friday even before OPEC holds talks with non-OPEC producers the next day, but efforts were under way on Wednesday to convince Iran to participate in a deal.
Sources said Saudi Arabia did not want to be seen as putting too much pressure on Iran and hence Russia was instead trying to convince Tehran.
Zanganeh was due to attend a ministerial committee on Thursday, two sources said. Iran is usually not part of the committee, which includes Russia, Saudi Arabia, the UAE, Oman, Kuwait, Algeria and Venezuela.
Adding to the complications was a lack of compromise among usually aligned Gulf oil producers ahead of the Friday meeting, according to two sources familiar with the talks.
Traditional Saudi allies – the United Arab Emirates, Kuwait, Oman and Bahrain – believe Saudi Arabia was too quick to respond to U.S. calls for higher production, and have been rattled by Riyadh’s close co-ordination with non-OPEC Russia, sources said.
There are different views on how much to increase production and whether such a move should be gradual, one source said following a meeting of Gulf oil ministers on Tuesday evening.
Iraqi oil minister Jabar al-Luaibi said on Wednesday he hoped there would be agreement when OPEC meets but added: “The oil market has not reached the level of stabilization.”
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