VIENNA (AP) — Iran indirectly challenged OPEC kingpin Saudi Arabia on Wednesday, announcing 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 if it is freed of the sanctions under any nuclear deal with six world powers meant to ensure that its atomic activities cannot be used to make weapons.
It also raised the prospect of a production war inside the cartel, which is keen to project an image of unity among its 12 members. If Iran does ramp up its output — and Iraq and Libya make good on promises to do so as well — other OPEC members would have to reduce theirs to keep prices from dropping too much and hurting them all.
Iranian rival Saudi Arabia would be particularly under pressure. It is now producing about a third of OPEC's daily output of about 30 million barrels
Under such a scenario, "it would be difficult for the Saudis to maintain production levels without risking lower prices," said analyst Jason Schenker of Prestige Economics.
That potential problem was not on the top of the agenda at Wednesday's meeting, where the oil ministers agreed to extend present output targets of 30 million barrels a day.
But the Organization of the Petroleum Exporting Countries may have to focus on the prospect of overproduction as early as their next meeting on June 11.
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— if it happens — is unlikely before mid-2014.
If and when the sanctions are lifted, Iran says it wants to ramp up production to pre-sanctions levels of 4 million barrels a day.
Iraq also wants to reach that target within a year, while Libya hopes to increase output to 2 million barrels a day once unrest ebbs. In all, that would add close to 4 million barrels to total daily production, meaning some members would likely have to cut back.
OPEC has had little success in the past at asking member countries to respect individual targets. But OPEC Secretary-General Abdullah Al-Badry sought to downplay looming problems from any surplus production, saying his organization would deal with it if and when that happened.