OPEC expects Iran’s output hike not to hinder group’s plans

OPEC expects the anticipated increase of Iran’s oil production unlikely to have a negative impact on the global market and output hike plans of the OPEC+ alliance, Secretary General Mohammed Barkindo said May 31.

His remarks were voiced during a meeting of the delegate-level OPEC+ technical committee, which met to track compliance with production quotas and to review supply-demand forecasts “given the diverse range of uncertainties” during the coronavirus pandemic.

The JTC meeting was held ahead of a full OPEC+ ministerial meeting on June 1 when the alliance is expected to weigh in on its decision to gradually ease production cuts over May-July and at the same time as the fifth round of Vienna talks on Iran’s nuclear deal was underway.

“We anticipate that the expected return of Iranian production and exports to the global market will occur in an orderly and transparent fashion, thereby maintaining the relative stability that we have,” Barkindo said during the meeting.

Three delegates said there was no discussion about Iran in JTC, but it could still come up at JMMC and the full OPEC+ meeting.

Prior to the meeting, Iranian long-standing oil minister Bijan Zanganeh, who will be stepping down after June elections, said Iran’s production could “easily” reach 6.5 million b/d once the US sanctions are lifted.

Realistically, US sanctions relief for Iran could bring about 1.05 million b/d of Iranian crude supply into the market between May and December, Platts Analytics estimates, from 2.43 million b/d of crude it produced in April.

Yet, the deal on sanctions relief is unlikely to be struck in May as was previously hoped.

“I am not personally confident that we reach a conclusion in this round of talks…The delegations may possibly need to return to their countries for more consultations,” Iran’s head negotiator Abbas Araghchi said, as quoted by state news agency IRNA.

No changes discussed
The OPEC+ technical committee focused mainly on supply-demand forecasts and did not discuss any changes to the alliance’s plan to increase output by 2.1 million b/d by the end of July, delegates said.

According to internal documents, OPEC kept its global oil demand growth forecast for 2021 unchanged at about 6 million b/d and slightly increased its forecast for supply deficit to 1.4 million b/d.

Overall, the JTC was still optimistic that demand would grow substantially in the coming months.

The alliance’s total conformity level with oil production cuts stood at 113% in April, sources said.

The Joint Ministerial Monitoring Committee co-chaired by Saudi Arabia and Russia will meet June 1 afternoon to review the reported numbers, followed by the full OPEC + meeting.
Source: Platts