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Iran snubs Saudi, Russian proposal to cap oil output

The Starla, an Iranian crude oil tanker, makes

The Starla, an Iranian crude oil tanker, makes a second call to South Korea's largest oil refiner SK Energy on Feb. 4, 2016. In an announcement on Feb. 17, 2016, Iran said it would not cut oil production to reduce the world oil glut and push up prices. Credit: EPA / Yonhap

Iran on Wednesday snubbed a proposal agreed to by four influential oil producers to cap crude output if others do the same, with a senior oil ministry official saying Tehran has no intention of freezing oil output levels.

Iran’s OPEC envoy Mahdi Asali said his country will in fact keep increasing its crude exports until it reaches levels attained before international sanctions were imposed on Tehran over its nuclear program.

Asali’s comments came during four-way, closed-door talks in Tehran with his counterparts from Iraq, Venezuela and Qatar.

On Tuesday, Saudi Arabia, Russia, Venezuela and Qatar conditionally agreed to cap output at January’s levels in order to halt a slide that has pushed oil prices to their lowest point in more than a decade. Oil prices recently plummeted below $30 a barrel, the lowest in 13 years.

The four countries made their announcement after an unexpected meeting in the Qatari capital of Doha that pointedly did not include Iran. They agreed to act only if other producers made similar freezes.

Asali said the fall in oil prices should be blamed on oversupply and that it was up to Saudi Arabia and others to cut down production to boost oil prices. He said the four nations that participated at the Doha gathering could stabilize oil prices on their own — if they cut their production by 2 million barrels a day.

“These countries increased their production by 4 million barrels when Iran was under sanctions,” Asali was quoted as saying by Shargh, a daily newspaper. “Now it’s primarily their responsibility to help restore balance on the market. There is no reason for Iran to do so.”

Iran is eager to ramp up its exports now that sanctions related to its nuclear program have been lifted, saying recently it aims to put another 500,000 barrels a day on the market. Figures from the International Energy Agency show it pumped 2.9 million barrels daily in December, before sanctions were lifted.

Before 2012, Iran exported 2.3 million barrels a day, but that year its crude exports fell to 1 million.

On Tuesday, Iran petroleum minister Bijar Namdar Zangeneh signaled the country has no intention of giving up its share of the market. He acknowledged that global markets are “oversupplied,” but said Iran “will not overlook its quota,” according to comments carried by Shana, his ministry’s news service.

Even with Iran’s cooperation, it was unclear if the Doha plan would be enough to put a floor under prices.

The United Arab Emirates energy minister Suhail Mohamed al-Mazrouei refused on Wednesday to discuss the Doha proposal after giving a keynote address at a Dubai conference in which he mentioned low oil prices only in passing.

“I will only talk about this conference,” he said, before smiling and walking away from reporters shouting questions.

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