Iranian officials said on Wednesday (17 February) that Tehran will continue to increase its oil production, pouring cold water on suggestions that the country will collaborate with Russia and Saudi Arabia to freeze output.
On 16 February, Saudi Arabia's oil minister Ali Al-Naimi said that his country and Russia, the world's two largest crude producers, had reached an agreement not to increase oil production this year after holding talks with several members of the Organization of the Petroleum Exporting Countries (OPEC).
Saudi Arabia, however, made clear that what would be the first global oil production deal in 15 years would only go ahead if both OPEC and non-OPEC producers committed to adhere to the plan, something Russia failed to do in a similar situation in 2001.
Those hopes, however, appear to have already been dented after Iran's OPEC envoy, Mehdi Asali, indicated that Tehran intends to increase its output until it reaches the pre-sanctions levels.
"Asking Iran to freeze its oil production level is illogical [...] when Iran was under sanctions, some countries raised their output and they caused the drop in oil prices," he was quoted as saying by Iran's Shargh daily newspaper.
"How can they expect Iran to cooperate now and pay the price? We have repeatedly said that Iran will increase its crude output until reaching the pre-sanctions production level."
As Iran's stance would nullify attempts by other countries to cut oil production aimed at boosting oil prices from its current lows, Venezuelan oil minister Eulogio Del Pino and Iraqi Oil Minister Adel Abdel Mahdi have decided to travel to Tehran to speak to their Iranian counterpart Bijan Zanganeh.
During the past three years, Iran's crude production has been relatively flat, averaging 2.8m barrels per day in 2015, which accounted for 9% of OPEC's total oil production.
However, according to the US Energy Information Administration, the country's annual average crude oil production is forecast to grow to 3.1m bpd in 2016, which would represent 10% of projected total OPEC production, and to close to 3.6m bpd in the following 12 months.
"Iran is returning to the market and needs to be given a special chance but it also needs to make some calculations," a source close to OPEC was quoted as saying by Reuters.
Having risen as high as $35.55 a barrel on 16 February, Brent crude dropped back to $32.11 a barrel by early European morning trade on 17 February, while West Texas Intermediate edged down to $28.97 a barrel.