Iran warns Opec against indecision on output cut

Iran, one of Opec’s biggest oil producers, but handicapped by repeated sanctions on its economy, has warned the if the Opec, at its meeting later this week fails to arrive at a deal to cut oil production and rebalance the market, oil prices could nosedive, hitting cartel members’ budgets.

In an interview with Bloomberg, Iran’s OPEC governor Hossein Kazempour Ardebili has warned that if the group failed to reach an agreement on a sizeable cut of around 1.4 million bpd as is being suggested, it would send oil prices plunging to $40 a barrel. 

Iran is disappointed at Opec-non-Opec cartel led by Saudi Arabia and Russia for driving up production to gain from lower Iranian oil output following the IS sanctions.

While Iran’s oil exports have dropped by some 1 million bpd, they are likely still holding onto above 1 million bpd, Iran hopes to continue pumping oil under a US waiver for eight of its customers, including India and China.

Iran has said it will not take part in any cuts while US sanctions on its oil are in place.

Meanwhile, Gulf oil producer Qatar also announced on Monday that it would be quitting Opec by 1 January as it focuses on natural gas, although it would attend the current (6-7 December) Opec meeting in Vienna.

Iran also said that a higher price of oil is not an insignificant argument for many of the cartel members who can’t balance their budgets at $60 a barrel.

Meanwhile, India is reported to be working on a rupee payment mechanism for oil imports from Iran as this can be used payments for exporting items to Tehran.

State-owned UCO Bank is expected to announce the payment mechanism in the next 10 days, reports quoting source said.