A global deal to freeze oil production could be signed in April and exclude Iran, which has the right to boost output after years of sanctions, Russian energy minister Alexander Novak said on Monday after talks in Tehran.
Oil fell around 3 percent on Monday after Iran dampened hopes of a coordinated stabilisation of production any time soon, saying it would join such discussions after its own output had reached 4 million barrels per day (bpd).
Four of the world’s leading oil producers – Russia, Saudi Arabia, Qatar and Venezuela – met in Doha last month, saying they were ready to hold output at January levels if other producers did the same.
A final agreement on an output freeze to support oil prices, which have fallen 65 percent since peaking in June 2014 due to oversupply, is seen next month, possibly again in Doha, Novak said.
He said the deal could exclude Iran as the country seeks to regain production hit by now-lifted international sanctions imposed over Tehran’s nuclear programme.
“We share (the view) that Iran is in a special situation. The sanctions that had been introduced had materially hit (Iran’s) output,” Novak said after meeting his Iranian counterpart Bijan Zanganeh.
Russia and Iran are considered to be on friendly terms. Moscow was a staunch supporter of lifting international sanctions imposed over Tehran’s nuclear programme.
Those sanctions were effectively removed in January, paving the way for Iran to increase its production of crude and adding uncertainty to already jittery oil markets.
Iran currently produces around 3.1 million bpd of oil. The sanctions also cut crude exports from a peak of 2.5 million bpd before 2011 to just over 1 million bpd in recent years.
Novak said Iran still insisted on a recovery in its oil output before any production freeze.
“On the whole, Iran supports the need for coordination between oil exporters, including a possible freeze. But Iran’s position is that they have to first restore their production volumes … After that, they are ready to join the freeze,” Novak said.
The Russian minister said oil markets were now more balanced but he called for a solid deal on stabilising output, “otherwise the markets will face more uncertainty, which will lead to more volatility”.
He said oil prices were expected to be between $40 and $50 per barrel by the year-end, compared to just below $40 currently.