Iran says it supports decision on oil production 'ceiling'

Iran supports the decision by Opec and non-Opec oil producers to keep a “ceiling” on oil production, Iranian oil minister Bijan Zanganeh said on Wednesday, quoted by the ministry’s official Shana news agency.

“The decision that was taken for the Opec and non-Opec members to keep their production ceiling to stabilise the market and prices for the benefit of producers and consumers, is supported by us,” he said.

He was speaking after he met his counterparts from three other producing nations – Iraq, Venezuela and Qatar – to discuss a proposal to freeze output at January levels.

Mr Zanganeh did not explicitly say in his remarks quoted by Shana that Iran would keep its own output at its January level.

“If Iran’s not part of the deal, it isn’t worth much,” said Eugen Weinberg, head of commodity markets strategy at Commerzbank AG in Frankfurt. “After fighting to end sanctions for years and finally being free of them, why Iran would choose to put sanctions on themselves by freezing their production?”

More than a year since Opec decided not to cut production to boost prices, oil remains about 70 per cent below its 2014 peak.

Supply still exceeds demand and record global oil stockpiles continue to swell, potentially pushing prices below $20 a barrel before the rout is over, Goldman Sachs said last week.

Oil extended gains following the end of the meeting. Brent crude, the international benchmark, rose 5.7 per cent to $34.03 a barrel on the London-based ICE Futures Europe exchange at 3.46pm local time.

By merely capping supply rather than cutting it, the deal wouldn’t succeed in tackling the global oil glut, Goldman Sachs and BNP Paribas said.

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