Iran Insists it Will Not Halt Oil Exports

Carola Hoyos in Vienna, The Financial Times:

Iran’s oil minister said on Tuesday Tehran would not halt its oil exports because of growing tensions over its nuclear programme. Kazem Vaziri said on Tuesday: “We have no reason to stop our exports.” He added that there was no link between Iran’s oil exports and the question over its nuclear programme. READ MORE

Iran earlier this month called on the Organisation of the Petroleum Exporting Countries, the group that supplies 40 per cent of the world’s oil, to reduce its production by 1m barrels a day. Some diplomats, Opec delegates, oil traders and analysts saw this as a message that Iran would be willing to use its oil as a political weapon, others saw it simply as Iran’s attempt to keep oil prices from falling.

Mr Vaziri was speaking as members of the Opec met in Vienna to agree to maintain their oil production at a near 25-year high.

“We are not cutting just for the sake of cutting; it’s for regulation of the price in the market,” said Fathi Shatwan, Libya’s energy minister. “Since the price is high, there’s no reason to cut,” he added.

But Opec’s willingness to continue to supply the world with almost all the oil that it can has had little impact on high oil prices because geopolitical concerns over instability caused by the Iran row and civil unrest in Nigeria have prompted traders to keep their long positions.

Several Opec ministers, including those of Libya and Venezuela, warned on Tuesday that United Nations sanctions on Iran – Opec’s second largest producer – would drive oil prices higher.

Ali Larijani, Iran’s top nuclear negotiator, on Tuesday told state television that if Iran’s nuclear file were to be referred to the UN Security Council, it would be the “end of diplomacy.”

In Vienna, Opec ministers said they would review their decision to keep production high at their next meeting in March. Several ministers noted Opec would be ready to cut output if prices fell, though others believed it would not prove necessary.

High oil prices no longer as accurately portray the supply and demand situation in the market as they once did, Opec delegates and analysts said.

The market is well supplied, but prices are high because of the geopolitical premium, they said.

Some Opec ministers fear prices could drop if that premium disappeared or if their strong forecasts for global economic growth prove too optimistic.