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Iran snubs Doha plan, won’t freeze oil output; UAE keeps lips shut

Iran on Wednesday snubbed a proposal agreed to by four influential oil producers to cap their crude output if others do the same, with a senior Oil Ministry official saying Tehran has no intention of freezing oil output levels. Mahdi Asali, Iran’s OPEC envoy, said his country will in fact keep increasing its crude exports until it reaches levels attained before international sanctions were imposed on Tehran over its nuclear program.

Asali’s comments came as Iran’s oil minister was expected to hold three-way, closed-door talks in Tehran with his counterparts from Iraq and Venezuela. On Wednesday, Venezuela joined Russia, Saudi Arabia and Qatar in conditionally agreeing to cap their output at last month’s levels in order to halt a slide that has pushed oil prices to their lowest point in more than a decade. Oil prices recently plummeted below USD 30 a barrel, the lowest in 13 years.

The four countries made their announcement following an unexpected meeting on Tuesday in the Qatari capital of Doha that pointedly did not include Iran. They agreed to act only if other producers made similar freezes.

Asali said the fall in oil prices should be blamed on oversupply and that it was up to Saudi Arabia and others to cut down production to boost oil prices. He said the four nations that participated at the Doha gathering could stabilise oil prices on their own if they cut their production by 2 million barrels a day.

“These countries increased their production by 4 million barrels when Iran was under sanctions,” Asali was quoted as saying by the Shargh daily. “Now it’s primarily their responsibility to help restore balance on the market. There is no reason for Iran to do so.” 

Iran is eager to ramp up its exports now that sanctions related to its nuclear program have been lifted, saying recently it aims to put another 500,000 barrels a day on the market. Figures from the International Energy Agency show it pumped 2.9 million barrels daily in December, before sanctions were lifted. Iran used to export 2.3 million barrels per day but its crude exports fell to 1 million in 2012. On Tuesday, Iran’s petroleum minister, Bijar Namdar Zangeneh, signaled the Islamic Republic has no intention of giving up its share of the market. He acknowledged that global markets are “oversupplied,” but said Iran “will not overlook its quota,” according to comments carried by his ministry’s Shana news service. 

Meanwhile, dodging reporters’ questions, the United Arab Emirates’ energy minister on Wednesday refused to discuss a proposed cap to crude oil production agreed to by four oil-producing countries the day before, raising new questions about the proposal aimed at stabilising global prices. Minister Suhail Mohamed al-Mazrouei’s stance suggests regional rivalries also may be in play, as Russia and Saudi Arabia joined Qatar and Venezuela on Tuesday in agreeing to the deal if other producers go along.

The surprise closed-door meeting involving the four countries in the Qatari capital, Doha, apparently did not include an Emirati official. Qatar and the Emirates, both oil and gas powerhouses in their own right, also compete with each other in the aviation industry and cultural pursuits.

Al-Mazrouei, who gave a keynote address at the 2016 CIS Global Business Forum in Dubai, mentioned low oil prices in passing in his speech. Afterward, journalists followed him outside. “I will only talk about this conference,” he said, before smiling and walking away from reporters’ shouted questions.

Al-Mazrouei then entered a side room at the hotel hosting the event. Security guards later arrived to put up a golden rope to keep journalists away. He left some 15 minutes later, still trailed by shouted questions.

Later, he took to Twitter to say: “UAE oil policy is open to cooperate with all producers toward mutual interest of the market stability and we are optimistic on the future.” Whether the Doha plan is enough to put a floor under prices is uncertain.

The proposal depends on cooperation from a range of producers, including Iran, which is eager to ramp up its exports now that sanctions related to its nuclear program have been lifted. A barrel of benchmark New York crude fell 40 cents to close at USD 29.04 in New York. A barrel of Brent, the international standard, fell USD 1.21 to USD 32.18.
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