VIENNA — Iran indirectly challenged OPEC kingpin Saudi Arabia on Wednesday, announcing that it plans to pump as much oil as it can once sanctions on its crude exports are lifted, even if its extra output drives prices into the basement.
The comments by Iranian oil minister Bijan Namdar Zanganeh reflected Tehran's determination to regain its global role as an oil power as soon as it is freed of the sanctions under any nuclear deal with six world powers meant to ensure that it cannot make atomic weapons.
The Saudis produce about a third of OPEC's output now, and Zanganeh, in comments ahead of a meeting of OPEC's 12 oil ministers, said his country was determined to regain its share "under all circumstances."
"We will produce 4 million even if the price drops to $20," he told reporters. Benchmark Brent crude on international markets now sells for nearly six times as much, and a drop to anywhere near $20 would spark a crisis among oil exporters by leaving production costs far outstripping sales revenue.
Iran's agreement to limit its nuclear program is still only a preliminary one. Sanctions on its oil exports are likely to stay in place until a final deal is reached, which is unlikely before mid-2014. But the Iranian challenge reflected potential problems ahead for OPEC, unless the Saudis and others are prepared to cut back on their production and make room for a resurgent Iran.
Bitter regional rivals with Iran, the Saudis may not be ready to cede much ground.
Saudi oil minister Ali Naimi sought to ease concerns, telling reporters he did not see a price war on the horizon.
"I hope Iran comes back (and) produces all it can," he said. But he gave no sign that his country was ready to reduce output, saying it remains "prepared to supply our customers with what they need."
Naimi and other oil ministers came to Wednesday's meeting saying the market is well balanced and expressing happiness with present prices. That means that ministers on Wednesday will probably opt to keep the present OPEC output target at around 30 million barrels daily.
But a major uptick in Iranian exports — and attempts by Iraq and Libya to increase their own output — could result in an oil glut. OPEC has had little success in the past at asking member countries to respect individual targets.1 comment on this story
Zanganeh on Tuesday suggested oil sanctions may be incrementally relaxed even earlier than mid-2014. In a nod to the Saudis, he said he hoped OPEC members understand that "when a member country comes back ... they should open the doors for him and not fight with him."
Strong U.S. shale oil production could add to internal OPEC pressures beyond political tensions caused by Sunni Saudi Arabia vying with Shiite-led Iran and Iraq.
All three countries have put forward candidates for the post of OPEC secretary general, who acts as the voice of the organization between meetings. But with their rivalries strong and potentially harmful to OPEC unity, the meeting is expected to skirt the issue and extend Libya's Abdullah Al-Badry's term for another year.
Margaret Childs contributed to this report.