Iran to raise oil output by 4 mln barrels: OPEC Freeze is still likely?

Iran is prepared to increase its oil output to 4 million barrels per day, returning to the pre-sanction production levels. Does this influence the OPEC Freeze negotiations? 

5 September, AtoZForexIn the second half of August crude oil reached $50 a barrel, supported by the increasing buzz of OPEC freeze. However, the price rally did not sustain and eventually dropped as analysts believe that the OPEC will not act. Also, last week's U.S. job growth data was unpromising. The data didn’t influence the view of investors that there might be the rate hike later this month. Hence, the greenback stranded firm while oil prices dropped further by 1 percent.

Adding pressure on the falling oil pricesIran stated today that it would raise its oil output in a couple of months depending on the market demand. Seyed Mohsen Ghamsari, the director for international affairs at National Iranian Oil Company (NIOC), stated that Iran is prepared to increase its production to 4 million barrels per day in the first quarter of 2017. Thereafter, the NIOC has plans to raise its production capacity to 5 million bpd in the coming two or three years.
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OPEC Freeze is still likely?

Alexander Novak, the minister of energy in Russia, mentioned the OPEC freeze will be covered during the meeting of OPEC ministers in Algeria later this month. As the third largest OPEC member, Iran would have to agree with the oil production freeze, otherwise the no measures will be taken. The country has said that it will only agree to an oil output freeze if other producers allow Iran to get back its market share. Hence, the OPEC freeze is still on the table, considering that today the NIOC shared its plans to raise the production to pre-sanction levels.

See also: No bailout money for Greece this September

Despite the OPEC will successfully enforce an oil output freeze, Morgan Stanley analysts believe that the effect will only be positive on the short-term. The bank's analysts project that on the medium-term it will have negative consequences for the oil prices and have little impact on the near-term oversupply.

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