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I I r r a a n n E E c c o o n n o o m m y y U U p p d d a a t t e e
Issue 94/2016 – Monday September 6th
Despite soaring output, Iran’s oil revenue shrinks due to falling prices
Almost nine months since the implementation of the nuclear deal, Iran’s oil production and export levels have reached 3.63 million bpd1 and 2.1 million bpd2, respectively, up from about 2.8 million bpd in production and 1 million bpd in exports during the sanctions era. However, the revenue surplus that could have been earned from this output and export surge has indeed been offset by a significant reduction in global oil prices since summer 2013. The OPEC’s latest report shows that the average price of Iran’s oil has fallen from $105.46 per barrel in 2012 to $35.74 a barrel in August 2016.
The following graph the data of which have been obtained from OPEC’s regular reports indicates the reverse order of Iran’s oil output and prices.
...Iran and Algeria negotiate oil freeze scheme ahead of an OPEC meeting in later Sept.
The declining oil revenues despite a significant increase in production and exports has caused Tehran to exert efforts to push prices up even by stepping back from its previous strong stance of not joining the so-called oil freeze scheme supported by Saudi Arabia and Russia. Tehran has already started consultations with some OPEC and non-OPEC members in this respect. Petroleum Minister Bijan Zangeneh hosted his Algerian counterpart Nouredine Bouterfa on Saturday ahead of a meeting of OPEC ministers in Algeria in late September on the sidelines of the 15th International Energy Forum (IEF15). No details have been released on the negotiations between Zangeneh and Bouterfa but the Algerian minister told reporters after the meeting that oil price of
$50 a barrel is not acceptable and that OPEC members are seeking prices at $50-$60 per barrel. The Algerian minister declined to answer a question on if Iran could be exempted from the oil production cap scheme, and confined himself to saying “this would depend on the Iranian side’s opinion” and that he cannot answer this question.
1 According to OPEC’s August 2016 report
2 According to NIOC International Affairs’ deputy – 16 August 2016 3.63 mbpd
2.98 mbpd
2.67 mbpd 2.77 mbpd 2.84 mbpd
3.63 mbpd
$106.05
$99.49
$54.28
$35.74
2011 2012 2013 2014 2015 2016 Aug
oil output (mm bpd) oil price ($ a barrel)
$105.46
2 ...OPEC secretary
general in Tehran today to discuss oil output freeze
Meanwhile OPEC Secretary General Mohamed Barkindo will visit Tehran today (Monday) to meet with Bijan Zangeneh. Deputy Petroleum Minister Amir-Hossein Zamani-Nia has confirmed that Barkindo and Zangeneh will discuss the oil freeze plan (freezing production to boost prices). He said “having kept in mind the national interests of our country, we support any measure to restore prices and establishing stability in the oil market,” Zamani-Nia said.
...Russia supports Tehran still being exempted from oil freeze plan
Iran had earlier refused to join the oil freeze plan citing it is its inalienable right to re- capture the market share it lost to the rivals under sanctions. Russia President Vladimir Putin has supported the oil freeze scheme but said Iran can be exempted from the plan because it can be recognized that after three years under sanctions, this country deserves to complete its return to world markets. “Iran is starting from a very low position, connected with the well-known sanctions in relation to this country,” Putin said. “It would be unfair to leave it on this sanctioned level,” the Russian president was quoted as saying by Bloomberg on September 2nd.
According to Bloomberg, the agreement on oil freeze talks collapsed in mid-April just hours before it was due to be signed when Prince bin Salman insisted on Iran’s participation. Bloomberg notes that President Putin has said Iran should be allowed to continue raising output, and that he may recommend completing the plan when he meets with Saudi Deputy Crown Prince Mohammed bin Salman at the Group of 20 Summit in China (Sept 4-5).
Two MPs warned to nullify FATF
agreement
Meanwhile, Tasnim News Agency, linked to IRGC, quoted Mohammad-Ebrahim Rezaie, a member of the Majles National Security Commission as saying that following the FATF is a “disaster” which should be prevented from further implementing. Akbar Ranjbarzadeh, another member of the parliament and a member of the Majles presiding board told Tasnim News that the parliament won’t accede to such “a dangerous” agreement. Having faced mounting pressures from the conservative groups, CBI Governor Valiollah Seif announced this morning that:
“Putting any restrictions or cutting the provision of services to the Iranian individuals and entities --on the ground of the sanctions of the US, EU or international institutions- - has no base neither in the JCPOA nor in any other commitments of our country.”
In a letter he issued this morning to the managing directors of Iranian banks and credit institutions, Seif also underscored that “based on the JCPOA that led to the elimination of all sanctions, many Iranian individuals and entities were removed from the list of sanctions imposed by the UNSC, US and EU. This implies that foreign banks, companies, and financial institutions can conduct trade and financial transactions with them, and the US and EU won’t impose restrictions or penalties for carrying out such transactions.” Seif admitted that the name of some individuals and entities have not been removed from the list of sanctions, but underscored that in Iran, all banks and credit institutions can have financial and trade transactions with all real and legal Iranian individuals irrespective of whether they are in the list of international sanctions or not.
