VIENNA – Iranian Oil Minister Bijan Zanganeh said on Friday that most members of OPEC agree $75 a barrel is a “fair” oil price, the first such comment from one of the group’s most hawkish nations.
“I think most of the OPEC members believe that a price around $75 is a fair price for both sides and is working well,” Zanganeh told reporters as the Organization of the Petroleum Exporting Countries (OPEC) prepared to meet in Vienna, where the group will likely agree to carry on pumping at full throttle.
The comment adds to signs that many of the world’s biggest producers are gravitating towards a new equilibrium price that they believe may be low enough to deter competition from higher-cost frontiers without wrecking OPEC members’ budgets.
Until late last year, some in the group had consistently talked about $100 a barrel as a fair level for producer nations and consumers. But the rapid rise of U.S. shale oil and slower global demand growth has forced them to reconsider.
Ministers from Iraq, Angola and Venezuela have said this week that they reckon $75 to $80 is equitable, although there is no indication that the group as a whole – or de facto leader Saudi Arabia – is ready to curb supply to achieve it.
It is all the more surprising coming from Zanganeh, as Tehran is among the OPEC members most exposed to lower prices. Its budget for the year starting March 21 is based on a $72 oil price, although the IMF has estimated its fiscal break-even is above $107. Brent has averaged around $57 so far this year.
Zanganeh also said Iran was “not satisfied” with current oil prices. Brent crude has rebounded by as much as $20 a barrel after hitting a six-year low of $45 in January, but prices have fallen more than 5 percent this week. July futures were trading at just under $62 a barrel on Friday.
He also reiterated that Iran was aiming to add another 500,000 barrels per day (bpd) to production within two months of easing Western sanctions that have halved shipments in recent years, and as much as 1 million bpd within six to seven months.
“I don’t believe we will witness a new drop in the price” as a result of the increasing supply because other OPEC members will cut back to make room, Zanganeh said.
“I wrote a letter to OPEC member countries. It is our right to return to the market.”
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(Writing by Jonathan Leff; Editing by Dale Hudson)
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