A former official at the National Iranian Oil Company (NIOC) says if Iran’s oil exports reach the pre-sanctions level, Saudi Arabia will have to decrease its crude output.
In an interview with Azerbaijan’s Trend news agency on Wednesday, Fereydoun Barkeshli, NIOC’s former general manager for OPEC and international affairs, emphasized that should Iran’s oil production reach pre-sanctions level, “there is no doubt that Saudi Arabia will have to cut back production.”
Sanctions were imposed on Iran by the US and EU at the beginning of 2012, alleging that there was diversion in Iran’s nuclear program toward military objectives; an allegation that Iran categorically rejected.
The Islamic Republic and the P5+1 group of countries – the US, the UK, France, Germany, Russia and China – reached a mutual understanding on April 2 in the Swiss city of Lausanne, which is considered a prelude to the achievement of a comprehensive deal on Tehran’s nuclear program before a self-designated deadline at the end of June. A key point of the Lausanne statement was a promise to lift a series of economic sanctions on Iran – including those on the country’s energy sector.
Barkeshli, who is currently a private energy consultant and president of Vienna Energy Research Group, stressed that when the Islamic Republic returns to the global oil market with pre-sanctions level of production “Saudi Arabia will be required to reduce crude production to open space for Iran.”
He added that, in fact, Saudi Arabia might be willing to cooperate in this regard so as to “provide some breathing space for its own oil fields which are already under pressure due to excessive production.”
“On the other hand, lower oil prices have already … lowered … production [of] some conventional [forms of oil] as well as shale oil and other non-conventional crude oil [varieties] … [and these changes can] provide room for gradual return of Iran to the world market,” he said.
Iran has already announced that other oil producing members of the Organization of the Petroleum Exporting Countries (OPEC) must reduce output when sanctions imposed on Iran are lifted following a final nuclear deal in order to make room for the Islamic Republic in global markets.
Speaking to reporters on the sidelines of the 6th OPEC International Seminar in Austrian capital city of Vienna in early June, Iran’s Minister of Petroleum Bijan Zanganeh said Tehran attaches great importance to its share of the market.
“…For long-term and mid-term [purposes], a new form of Iranian contract for new projects … will be introduced and we [will] sign new contracts based on this new framework and structure, which we believe will be more attractive for the investors” and international oil companies, he told Press TV.
Also, speaking to reporters following OPEC’s ministerial meeting, Zanganeh said, “I wrote a letter to OPEC member countries. It is our right to return to the market.”
He added that other OPEC members should cut production to make room for Iran’s return to its former production level so that Iran’s re-entry into the market would not lead to a new drop in oil prices.