As Iranian oil minister eight years ago, Bijan Zanganeh spent a substantial amount of time in Vienna representing Iran in the Organization of the Petroleum Exporting Countries. Zanganeh was recently reappointed to the oil ministry by Iran’s western-friendly new President Hassan Rouhani. Led again by the industry veteran, Iranian oil negotiators will seek to reassert Tehran’s authority in OPEC. The country has been emboldened by its nuclear deal with the West and Iran’s return to prominence in OPEC may be as the cartel’s second biggest oil producer.
Since 2012, sanctions imposed on Iran by the West for its defiance on its nuclear program have cost the country billions of dollars in oil revenues and market share in OPEC. Iran’s main rivals, Saudi Arabia and Iraq, were quick to capitalize on the available market share. Zanganeh has gone on the record openly criticizing Iraq for increasing its market share at Tehran’s expense. In November, Zanganeh said, “Iraq has replaced Iran’s oil with its own. This Iraq move is not friendly at all.” Iraq is now OPEC’s second biggest producer.
Oil traders will be watching closely for signs of cooperation between the big three OPEC producers. When the interim nuclear deal is verified and the sanctions lifted, Riyadh and Baghdad will need to find room for Iran. An OPEC delegate from a rival Gulf Arab producer said, “We expect the Iranians to say, ‘We’re coming back to the market and we need some space.'” Iran’s exports will still be shackled by sanctions for at least another six months, so the status quo will not immediately change.
It is expected that the oil ministers will roll forward an agreement to hold their output near 30 million barrels daily for 12 member countries. Production from new shale technology has increased volumes from the United States, which may mean OPEC will need to cut output in the second half of 2014 to keep oil prices above $100 a barrel. A senior OPEC delegate said, “From now until the end of March, the market looks well balanced and the price should stay supported. But from June, there will be a need for a cut.”