Amir Moeeni told Shana that the meeting of the Organization of Petroleum Exporting Countries in Algiers next week is the meeting of oil exporters.
He said the main challenge facing the Algeria meeting is deciding the level of production for each of the contributors.
He went on to say the oil freeze plan in this year’s spring aimed to restore stability in the market and Venezuela seriously followed the initiative but eventually due to illogical persistence of Saudi Arabia and then certain Persian Gulf Cooperation Council members’ assonance with Riyadh to have Iran join the plan, it failed. “So, it seems that one of the main issues is deciding the level of production by the participants.”
He opined that it is not clear whether the production of January meeting or last month production of the countries will be the yardstick. “Any scenario can be raised in the meeting; however, the main question is whether enforcement of the decisions will result in market stability?”
Amir Moeeni referred to supply surplus in the oil market and said in the past two years, more than 1.5 million bpd oil was added to the inventory level on average. “So, one cannot expect considerable improvement in the prices and it is hoped that it will check harsh decline in the prices, though it might result in periodic increase in the prices.”
To a question whether stabilizing the production ceiling will be an opportunity or threat for Iran, he said, “If Iran is excluded from the plan and goes with increase in the production, it can be said it will create the opportunity for increase in the oil prices for the country.”
Amir Moeeni emphasized that surplus supply in the market, on the one hand, and high level of storage on the other, harshly affect the prices.
He noted, “Expecting prices to increase under the conditions will be illogical unless the current conditions in the market.”
The senior expert said, “Taking current conditions unchanged, there will be no suitable horizon for restoration of stability in the market; so, sharp and constant increase in the prices cannot be expected.”
Amir Moeeni emphasized that absolutely, any decline in the oil production by certain OPEC and non-OPEC producers will result in market stability; “Let’s say, it will lower oil supply surplus in the market and we will witness supply-demand balance in the market, eventually observing increase in crude prices.”
He added that growth in the prices will result in better conditions for production of alternative fuels, especially the shale oil, and any decision should be made with respect to market conditions and the cost of production of alternative fuel.
He said under the present conditions, political decisions and issues have cast their shadow on the oil market, adding that without improvement of the issues, one should not expect oil production of the countries to return back to the pre-sanctions level for Iran.
He said early 2016, Iran was the only country to speedily increase its production. Following Iran’s increased oil output, the topic of oil freeze was on agenda so that this way, Iran’s oil development process will follow a sluggish pace.
Freeze of production is not the breakthrough for stability to return to the market and producers should discard part of their output from the market to bring about balance in oil supply and demand and provide the possibility for improvement of the prices. “Such decisions should be based on market conditions and the cost of production of alternative fuels.
The International Energy Forum is to convene in Algeria from September 26-28. It will be the biggest meeting of the world energy ministers and 90 percent of oil and gas supply and demand globally is undertaken by them.
The forum is biennial session, specifying the framework of non-official talks of the oil and gas producing and consuming countries on the issues and topics influencing the entire world energy markets.
Translated by Behnaz Hossein Gholipour