Iran agrees on extending the cuts, if allies sign

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Iran’s Oil

According to some unofficial news coming straight from Iran, the OPEC’s third largest producer is interested in participating in further oil output cuts. In condition that there is of course, an agreement between other participating countries.

Saudi Arabia and Russia, concluded a deal on Monday saying they will extend output cuts for further 9 months, entering the 2018. The aim is to erode a existing glut. These 9 months would be more than 6 months previously discussed.

Kuwait

Kuwait, as one of the producers, said on Tuesday it supports the proposal.

Iran was the only OPEC supporter agreed to boost its output under the supply cut deal. It will hold presidential elections on Friday. The Iranian position is less predictable, but it will soon be very clear.

“This statement shows the commitment of OPEC and major non-OPEC oil producers to bringing stability to the oil market, in which is essential to have security of supply in coming years.”(Reuters)

– Iran will probably agree to a 9-month prolong of cuts, when OPEC and non-OPEC countries meet in Vienna,  on May 25. Assuming that other producers, for example Iraq, also will accept the deals.

Last year talks

Previous year, talking about the supply cut deal, Iran effectually argued to be allowed room to pump more, because it lost market share while being under Western sanctions. Back then they were raising the question of whether Tehran would sign up for a longer supply cut.

Presidential Elections In Iran

Friday is the day of presidential elections in Iran. President Hassan Rouhani is Facing 5 other candidates, for a second term, who are mostly prominent hardliners.

Bijan Zanganeh, Iranian Oil minister, in his speech on May 6, said he thinks producers are likely to extend the OPEC-led deal whiles he did not give a timeframe. He also added, by some real forecasts $55 is suitable price for oil.

Prices have gained back-up from the supply cut pact. But also, high inventories and rising U.S. production have acted as a brake on the recovery. Brent crude was trading at $52 on Tuesday.

“Low oil prices may bring satisfaction for some consuming countries in the short run, but in the long term as a result of reduced investment in new oil production, they could end up paying a much higher price for a barrel of oil.”

Some of the analysts predict a humble price recovery as likely in the summer months. In summer months it happens that U.S. gasoline demand seasonally rises, citing factors such as a likely drawdown in inventories.

“I think prices will move up to $51-$55 and in August may go to even $58.