(Bloomberg) -- Iran joined Saudi Arabia in saying it would keep on pumping despite oil prices hovering near a six-year low, giving the strongest signal yet that OPEC wouldn’t act at the group’s meeting in Vienna to curb the global supply glut.
As ministers from the Organization of Petroleum Exporting Countries gathered in Vienna, Iran said it would boost shipments after the expected lifting of international sanctions next year and wouldn’t accept any curbs until it restored about 1 million barrels a day of output. Saudi Arabia said it didn’t feel obliged to cut production, which is running close to a record.
“We don’t expect OPEC to do anything,” Iran’s Oil Minister Bijan Namdar Zanganeh said on Friday as the group’s ministers sat down to discuss policy, including how to fit new member Indonesia into its output ceiling. "It seems that the global market will grow demand” amid oversupply of 1.5 million to 2 million barrels a day, he said.
With oil prices near a six-year low, cash-strapped countries including Venezuela, Ecuador and Algeria are pressuring Saudi Arabia to cut production. A year ago, Riyadh spearheaded a decision to maintain output and fight for market share rather than cut production to sustain high oil prices. The move helped to send Brent crude, the global benchmark, down to $42 a barrel from near $100.
The Saudis, the world’s largest oil exporters, have stuck to their one-year-old view that any output cuts won’t work unless big producers outside OPEC, including Russia and Mexico, participate. If prices recover sharply, it could revive some U.S. shale production, displacing OPEC crude.
Saudi Arabia is willing to cooperate with anyone to re- balance the market, Oil Minister Ali al-Naimi told reporters on Friday after OPEC ministers arrived to discuss policy. The pressure isn’t solely on Saudi Arabia for output cuts, he said, adding that Iran’s return will do “nothing” to the market as demand for oil will strengthen next year.
“Demand is going to increase anyway,” according to al- Naimi, who said Saudi Arabia hasn’t cut investment. “Nothing has been curtailed. We have a responsibility to maintain our 12.5 million-barrels-a-day capacity.”
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