Financial Tribune- A prominent economist has welcomed an OPEC accord to cut crude output as a win-win deal that protects Iran’s national interest, asserting that the agreement could set a precedent to resolve political differences in the tumultuous Middle East.
Members of the Organization of Petroleum Exporting Countries put together a deal in Vienna on Wednesday to cut their collective output by 1.2 million barrels per day in an effort to ease a global glut and lift stubbornly low prices.
The agreement, which was the first of its kind by the oil organization in eight years, will be effective through the first half of the next year. Non-OPEC producers including Russia are expected to reduce supplies by another 600,000 barrels.
“This was a win-win deal and in line with our national interest. The deal could also ensure that Iran’s economy would remain relatively stable for another year,” Ali Shams Ardekani, head of the Energy Commission at Iran Chamber of Commerce, Industries, Mines and Agriculture, was quoted as saying by khabaronline.ir.
“Protecting national interest is the cornerstone of every international negotiation … and our interests were upheld at the OPEC talks,” said Ardekani, who is an authority on oil affairs.
“This agreement could be a platform to settle other issues, including the political rift with Saudi Arabia. In fact, the OPEC pact can (and should) help serve as an overture to achieve another win-win agreement.”
Tehran-Riyadh relations soured last year after nearly 2,000 people, including hundreds of Iranians, died during Hajj pilgrimage rituals in Mina, outside the holy city of Mecca in Saudi Arabia.
The two sides cut diplomatic relations in January after protesters stormed the kingdom’s embassy in Tehran and consulate in Mashhad in response to Riyadh’s execution of prominent Saudi Shia cleric Sheik Nimr al-Nimr.
Ardekani, a former diplomat and government advisor who holds a PhD degree in economics, added that Saudi Arabia very much needed the deal as the top oil producer was left with a big hole in its budget last year and is desperate for higher oil prices for an international listing of its state oil company, Saudi Aramco, which is expected to take place by early 2018.
“The Saudis are selling some of the stocks of Aramco. They need more attractive crude prices to sell Aramco shares at a higher price,” he noted.
The official conjectured that with oil at $55-60 per barrel, the listing of Aramco could generate an additional $100 billion for the desert kingdom.
“Saudi Arabia would also make $50-60 million a day by selling 10 million barrels,” he noted.
According to the OPEC deal, Saudi Arabia will shoulder more than 40% of all OPEC cuts, or 486,000 barrels a day. Second-place Iraq will slash output by 210,000 barrels while Iran will be allowed to pump 90,000 barrels higher than its October production level which stood at 3.707 million barrels.
In a statement on Thursday, President Hassan Rouhani welcomed the OPEC deal and called the decision “a positive development.”
Oil Minister Bijan Namdar Zanganeh also said in a TV interview that the deal proved that “It is possible to cooperate and interact despite rivalries and political differences.”