News ID: 255480
Published: 0210 GMT July 08, 2019

Oil minister: US uses sanctions to gain market clout

Oil minister: US uses sanctions to gain market clout

Economic Desk

Zanganeh optimistic about Iran's oil exports

Iran's Oil Minister Bijan Namdar Zanganeh said the United States is using sanctions to "shock" the global oil supply and gain market clout for its booming shale oil production.

"I think one of the reasons for sanctions against Iran and Venezuela is opening up the market for American oil sales," Zanganeh said in an interview with Iranian TV late Sunday.

Zanganeh blamed the United States for destabilizing the oil market, saying that Washington was "using the oil as a weapon" to pressure Iran.

"Destabilizing the market is in America's interest ... cooperation between the members of (the Organization of the Petroleum Exporting Countries) OPEC and non-OPEC oil producer states will stabilize the market," he said.

Zanganeh added that the world's energy supply is threatened by the US, not Iran which is a major guarantor of energy stability and peace in the region.

The remarks were in reaction to an earlier claim by Saudi Oil Minister Khalid al-Falih, who told CNN Iran is posing "threats to global energy security."

"Mr. Falih is a respected technocrat, and we won't hear such political words from him so often. He may have been asked to make such political remarks," Zanganeh said.

"He could have made the remarks while both of us were in Vienna, so that I could immediately respond. Why has he made such remarks while I was 3,000 kilometers away?"

Zanganeh said unlike his Saudi counterpart's claim, Iran is not a threat to the world's energy security, but is the biggest guarantor of stability and energy security in the region.

The Saudi accusation comes as Iran itself is also harmed if the region's energy security is threatened, he said.

On Tuesday, Falih had told CNN Business that he's "concerned though about the security of oil supplies from threats from state and non-state actors that we've seen."

He cited recent attacks on oil tankers and pipelines as well as drone attacks on Saudi facilities, and blamed Iran for such developments.

"That's putting the global energy supply at risk," said Falih.

The US abandoned a landmark 2015 nuclear deal between Iran and world powers last year and reimposed sanctions on the Islamic Republic's crucial oil sales as well as other parts of the economy.

Iran's main demand – in talks with the European parties to the deal and as a precondition to any talks with the United States – is to be allowed to sell its oil at the levels before Washington pulled out.

New technology that allows for extracting oil and gas from shale rock formations has led to a boom in oil production in the US in recent years.

"This much oil production needs a market and could not be compensated for with regular OPEC cuts, therefore America needed to shock the market to find a place for itself. Some sanctions are (imposed) so that Americans can keep producing and developing shale oil," Zanganeh added.

He said that according to US figures, shale oil's breakeven cost can be as low as $40 per barrel. Benchmark Brent crude was trading at around $64 dollars a barrel in London on Monday.

The US is currently the world's biggest oil producer followed by Russia and Saudi Arabia, and is set to become a net exporter from 2021, according to the International Energy Agency.

The White House said in April that tightening sanctions on Iran will have "no material impact" on oil prices given the large supply of US oil on the global market.

OPEC, pressured by US output, abundant global crude supplies and weak oil demand growth, agreed last week to extend by nine months daily oil output cuts first announced in December aimed at supporting prices and soaking up excess supplies.

Iran, whose production has been severely hit by US sanctions, is exempt from the cuts agreement along with crisis-stricken Venezuela and Libya.


Upping oil sales


Zanganeh said that he was very hopeful of an improvement in Iran’s crude exports in spite of tightened US sanctions.

"I am very hopeful that our oil exports will improve," Zanganeh said, adding that the price of oil was not Iran's main concern.

"What matters now for Iran is the amount of oil that we can export," Zanganeh said.

Washington tightened sanctions on the country's oil exports in May.

Battling what he called "the most severe organized sanctions in history," Zanganeh last week vowed to keep selling oil via "unconventional means."

Iran's TV recently aired a program showing an Iranian-flagged tanker under US sanctions that delivered one million barrels of crude oil to China, one of the remaining partners to the nuclear deal and which has rejected America’s efforts to cut Iran’s oil exports to zero.

After the United States threatened to impose sanctions on companies that do business in Iran, France’s Total and China National Petroleum Corp. (CNPC) suspended investment in Phase 11 of the country's giant South Pars gas field last year.

Zanganeh said that talks are continuing with the Chinese company.

"They have so far failed to start developing the Phase 11 ... China is a friend of Iran and the latter would not opt for severing ties for foot-dragging in projects. We are seeking alternative solutions," Zanganeh said.

Separately, Zanganeh said Iran eyed 300,000 bpd oil production from its West Karoun oilfields in the southwest of the country.

AFP, Reuters and Press TV contributed to this story.


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