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Opec ‘would welcome’ Iran once sanctions lifted

Opec's Haitham Al Ghais told Adipec that the oil industry needs $600bn of investment a year Reuters
Opec's Haitham Al Ghais told Adipec that the oil industry needs $600bn of investment a year
  • Iran is ‘key player’ in oil market, says Opec chief Haitham Al Ghais 
  • Oil prices down nearly 1% on Tuesday on US debt fears 
  • Markets looking to Opec meeting on June 4 for clarity on output

Iran has the capacity to add “significant production volumes within a short period of time” and would be welcomed back to Opec when sanctions are lifted, its secretary general said on Monday. 

Iran is a member of Opec – the Organization of the Petroleum Exporting Countries – but its oil exports are subject to US sanctions intended to force the country to scale back its nuclear research programme. 

Opec chief Haitham Al Ghais was quoted as telling Iran’s state news agency Shana that he believed the country has increased its production by almost one million barrels per day (mb/d) of crude oil and condensate since sanctions on Iran were briefly lifted in 2015-2016. 

Former US president Donald Trump later reimposed sanctions on Iranian oil exports after he exited the US-Iranian nuclear agreement in 2018.  

Al Ghais, who is visiting Tehran for the first time, was quoted as saying: “Iran is a founding member of Opec and a key player in the global oil market

“It continues to invest in its oil sector, not only in the upstream but also in the downstream and petrochemical sectors.”

“So…we welcome the return of Iran’s oil production in the future, when sanctions are lifted. We look forward to that day. The market is growing. There is increasing demand and we believe that Iran is a responsible player amongst its family members, the countries in the Opec group.”

Along with the other Opec members, Iran is a central to “providing a stable and reliable supply of oil to customers and countries around the world,” he added. 

Asked about the effect of Opec’s voluntary production cut on global oil prices, Ghais said: “We don’t target a certain price level. All our actions, all our decisions are made in order to have a good balance between global oil demand and global oil supply.”

Oil prices dipped on Tuesday, mainly as a result of fears of a US debt default, but also because of potentially conflicting messages from the two Opec+ leaders, Saudi Arabia and Russia.

Brent crude futures fell 59 cents, or 0.8 percent, to $76.48 a barrel after rising by 0.5 percent earlier in the day, Reuters reported. 

US worries

Reports have emerged that Republican hardliners in the US Congress might derail the debt ceiling deal that President Joe Biden and House of Representatives speaker Kevin McCarthy had struck. 

Under the proposed deal, the US government’s borrowing limit would be raised to prevent a potentially catastrophic default on debt repayments. The US is grappling with an estimated $31 trillion of national debt. However, some hard-right Republican lawmakers said yesterday they might oppose the deal, which has put markets on edge. 

Meanwhile, commentators have pointed out mixed messages from Opec+ over whether members will increase their oil output cuts amid a recent slump in global oil prices.

Saudi Arabia’s energy minister Abdulaziz bin Salman Al Saud last week reportedly warned investors predicting a fall in oil prices to “watch out”, hinting that Opec+ may cut output, while Russia’s deputy prime minister has indicated that it would leave output as is.  

Opec is due to meet on 4 June.