Iran Confident of Oil Price Rebound

Thirteen producers on Thursday agreed at the 172^nd meeting of OPEC ministers in Vienna to extend an accord to scale back crude oil production by nine months to March 2018.

The initial agreement, announced late last year, was aimed at cutting the group's collective output by 1.2 million barrels per day, with Saudi Arabia shouldering nearly 40% of the cuts. Hours after the OPEC announcement, 11 non-members, led by world's top producer Russia, renewed their pledge to reduce supplies by 600,000 barrels daily.

But joint efforts by OPEC and non-OPEC producers to chip away at inventories and lift oil prices did not go well with international markets. Crude prices plunged nearly 5% and international markets, particularly oil and gas stocks, slid following the extension of cuts, Financial Tribune reported.

"I was surprised by the negative reaction of global markets as well as the oil price drop. It wasn't ordinary. But hopefully, prices will be revised and maintain an upward trajectory as that's what producers hoped to achieve from extending the cuts," Zanganeh said, Mehr News Agency reported Saturday, citing an interview published by the Oil Ministry.

The minister said that members of the Organization of Petroleum Exporting Countries have come a long way from their deep discord in the last several years which contributed to the collapse of global oil prices to multi-year lows in the beginning of 2016.

"Everyone was much more at ease at the Thursday meeting compared to other ministerial meetings of OPEC in the past three years. There was no major disagreement or contention among the members and every decision was made quickly.

Saudi Arabia, OPEC's de facto leader, and Iran spent most of the last year wrangling over a mechanism to reduce oil production. Tehran pressed for bigger market share as it was recovering from international sanctions which had stifled its output, while the Saudis said Iran had to be part of any supply cut deal.

In November, OPEC announced a rare and historic agreement to reduce supplies in which Iran won an exemption from the cuts.

Iran Oil Production Policy

Tehran is firm on its policy of raising crude production in the long-term, Zanganeh said.

"No one in the OPEC can dictate to us to reduce our production. Nothing happens unless we express our consent and agreement. No one has the audacity to tell us to reduce output unless we want to," Zanganeh said.

On Thursday, Reuters quoted Zanganeh as saying that "All OPEC decisions are short-term decisions. Production capacity is part of our long-term plans."

He also noted that the oil producing bloc "outdid market expectations," by extending the current supply cut deal by nine months.

But according to some analysts, the extension was apparently not enough as there was mounting anticipation before the Vienna meeting for deeper production cuts.