Iranian minister stresses OPEC right to be cautious about fragile oil market

Iranian Oil Minister Bijan Namdar Zanganeh has supported calls within the Organization of Petroleum Exporting Countries (OPEC) for continued cuts to global supply of crude, saying the oil cartel is right to be cautious about the future of a market which has been deeply affected by the spread of the coronavirus pandemic.

Zanganeh said after a Monday meeting of OPEC members that oil markets would remain fragile for the near future despite optimistic news about the development of coronavirus vaccines.

“The situation of the market still remains fragile and supply is high compared to the demand, thus the caution in OPEC is logical under such circumstances,” Zangeneh told reporters following the 180th OPEC meeting which was held virtually.

The remarks came as OPEC members agreed in principle to continue cuts of up to 7.7 million barrels per day (bpd) to the global supply after January when a current cut agreement comes to an end.

The cuts should be finalized in a Tuesday meeting involving major non-OPEC producers, a grouping which is known as OPEC+.

Zanganeh said some countries within OPEC and others in the OPEC+ have been opposed to 7.7 million bpd of fresh cuts. He named Russia and Kazakhstan as the main opponents, saying they support a cap of 5.7 million bpd on renewed cuts.

However, the Iranian minister, whose country is exempt from the cuts because of American sanctions, said Tehran would support the majority view in OPEC+.

Reports after the Monday meeting suggested that OPEC members had reached a broad consensus on three months of additional cuts after January if OPEC+ members also agree on the move.

OPEC members will reconvene their meeting on Tuesday just before they meet with OPEC+ members later in the day to finalize the supply cuts.