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06 October 2017 [12:17] - Today.Az
Iran will have to take bigger share of OPEC cuts in the case of further increasing the targeted volume of oil output cuts, Tom Pugh, the economist at British economic research and consulting company Capital Economics, told Trend.
"Iran is a great proponent of everybody else cutting output. Iran feels that because it has been under sanctions for so long, therefore, it shouldn’t have to do as much heavy lifting as other members. But it seems likely that if the cuts are deepened, Iran will have to take a bigger share of the cuts," he added.
Iran’s oil output decreased in August by 2,300 barrels per day month-on-month, and stood at 3.828 million barrels per day (mb/d), according to the September Oil Market Report of OPEC.
The report says that Iran’s August oil output was 310,000 b/d more than the 2016 average and 992,000 b/d more than the 2015 output.
Earlier, Iranian oil minister Bijan Zangeneh said there is no pressure on Iran to join the cuts.
"No [there is no pressure]. We are complying with our commitment very well. We have more than 100 percent average compliance," Zanganeh told reporters ahead of the Gas Exporting Countries Forum ministerial meeting in Moscow.
On May 25, OPEC member countries and non-OPEC parties, Azerbaijan, Kingdom of Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Sultanate of Oman, the Russian Federation, Republic of Sudan, and the Republic of South Sudan agreed to extend the production adjustments for a further period of nine months, with effect from July 1, 2017.
The reductions will be on the same terms as those agreed in November.
As for the possibility of the OPEC deal extension, Pugh noted that by extending the deal, OPEC+ is likely to just encourage further non-OPEC output and lose more market share.
Earlier, Russia and Saudi Arabia proposed to extend the oil production cut deal by June 2018.
"I don’t think extending it to June will be enough to do much. They would have to extend it until the end of 2018 in order to make any sort of difference," said Pugh.
Moreover, Spencer Welch, director of the oil markets and downstream team in the London-based IHS Mark pointed out that back in November 2016, this deal was intended as a short term nudge to rebalance the market, it is now looking increasingly likely that this supply cut is almost a permanent necessity.