Iran moots million-barrel daily Opec cut

Iran may propose that OPEC cut its output target by as much as 1 million barrels a day to halt the slide in crude prices when the country’s oil minister consults with his Saudi counterpart before the group gathers this week.

Bijan Namdar Zanganeh and Saudi Arabia’s Oil Minister Ali Al-Naimi will talk on the sidelines of the meeting in Vienna of the Organization of Petroleum Exporting Countries, seeking to define a common view among its 12 members for supporting prices, Iran’s state-run Mehr News agency reported, without saying where it got the information. An official in Iran’s oil ministry didn’t immediately comment when contacted by phone yesterday.

OPEC, supplier of about 40 percent of the world’s oil, will meet Nov. 27 in the Austrian capital to assess its collective output amid a supply glut and a 27 percent drop in prices this year. Half the analysts in a Bloomberg survey last week forecast that OPEC would cut production to shore up prices, while the other half said they didn’t see it deviating from an official 30 million barrel-a-day production target.

A decision by OPEC to decrease output would be “supportive to the market,” Tom James, managing director of consultancy Navitas Resources, said by phone from Dubai. “I’m not sure it would be enough to really push up prices and to get them back into the $90s.”

The drop in Brent crude, with the global benchmark trading at less than $80 a barrel last week, has prompted speculation of an OPEC cut. Officials from oil-producing countries stepped up diplomatic visits before the group’s meeting, discussing how to react to the plunge in prices to a four-year low.

James said he sees the market stabilizing and expects OPEC to refrain from announcing an output reduction this week. The group is more likely to monitor prices and demand into the first quarter of 2015 to determine if a cut is warranted at that time, he said.

Saudi Arabia, OPEC’s biggest member, remains committed to seeking stable prices, Al-Naimi said Nov. 12 in Mexico. Rafael Ramirez, Venezuela’s OPEC representative, visited Algeria, Qatar, Iran and Russia. Zanganeh traveled to the United Arab Emirates, Qatar and Kuwait.

Zanganeh may also meet with Alexander Novak, Russia’s energy minister, in Vienna this week, Mehr reported. Russia, while not an OPEC member, said it will send Novak and Igor Sechin, head of state-controlled OAO Rosneft, the country’s largest crude producer, for meetings with OPEC officials.

Two-thirds of global oil production comes from non-OPEC producers, Suhail Al Mazrouei, the U.A.E.’s energy minister, said in comments on his Twitter account yesterday. Producers, particularly those pumping crude from shale formations, “shall be concerned as we are in OPEC” about stability in crude markets and about finding a sustainable balance between supply and demand, he said.

Saudi Foreign Minister Prince Saud Al-Faisal met Russian Foreign Minister Sergei Lavrov in Moscow Nov. 21, and the countries said in a joint statement they’ll coordinate on “issues” affecting the energy and oil markets, without giving more detail. Saudi Arabia and Russia are the world’s two biggest oil exporters.

International sanctions imposed on Iran over its nuclear program are choking the Persian Gulf nation’s crude shipments. The government in Tehran is negotiating with the U.S. and five other world powers for an agreement to lift the curbs. The countries have set today as a deadline for final agreement, three days before OPEC is to meet.

Reaching an agreement in time is impossible because of the large number of details that still must be resolved, the semi-official Iranian Students News Agency reported, citing a member of the Iranian negotiating team it didn’t identify. The two sides were to start yesterday discussing terms for an extension of their talks, ISNA reported.-Bloomberg