MESOP NEWS: “CASH FOR MULLAHS” – Tehran’s Victory in OPEC Oil Deal

December 01 2016 –  MESOP   – After months of debate, Iran and the other members of OPEC have agreed a deal on oil production and exports.Iran’s Oil Minister Bijan Zanganeh said Tehran had succeeded in getting a production cut by OPEC while ensuring that the Islamic Republic is exempt. OPEC will reduce production by about 1.2 million barrels per day to 32.5 million bpd by January. Russia, which is outside the cartel but has been part of the freeze talks, also agreed to slash its output. The agreement, OPEC’s first drop in production since 2008, is in effect for six months.

Members are hoping for a recovery in the global oil price, down about 60% from a high of around $114 per barrel in 2014. Upon news of the agreement in Vienna, the price rose from $46 to $51.

Iran will be allowed to continue its post-sanctions recovery of output to 3.8 million bpd, about 15% below its level before stringent US and European restrictions took effect in 2012. Tehran has also restored exports to just under 2 million bpd, after falling to below 800,000 bpd at the height of the sanctions.While calling for the OPEC cut, Tehran held out against its inclusion, following the lifting of sanctions in implementation of the July 2015 nuclear deal. Saudi Arabia, Iran’s main rival in the Middle East, finally put forward a compromise offer allowing Iran at least 3.6 million bpd in production. Tehran continued to lobby OPEC leaders, however, including a visit by Secretary General Mohammed Barkindo to Tehran earlier this month.

Iranian media hailed Wednesday’s deal as a great triumph. The daily Iran wrote on its front page: This was the biggest achievement of the 171st Ministerial meeting of OPEC for Iran and a result of the powerful diplomacy of the country’s Petroleum Minister in the post-sanctions environment.