Several OPEC members want to revive the idea of setting new limits on oil production this fall as Iran regains much of the energy-industry might it lost during the years of Western sanctions, according to people familiar with the matter.
The nations—which include Venezuela, Ecuador and Kuwait—want to take another stab at cooperation between the 14-nation oil cartel, the Organization of the Petroleum Exporting Countries, and nonmembers like Russia.
A similar initiative died back in April during talks in Doha, Qatar, when Saudi Arabia backed out over Iran’s refusal to join in a so-called production freeze until it had reached pre-sanctions levels of oil production. Under the freeze, countries would have agreed to limit their production to certain levels in a bid to raise oil prices by constricting the amount of crude on the market.
Now, Iran’s production has crept back up to 3.6 million barrels a day, about 180,000 barrels a day above its levels in April and almost 600,000 barrels a day higher since world powers lifted economic restrictions on the country over its nuclear program in January. That brings it within reach of the 4 million to 4.2 million barrels a day that Iranian officials said they would require before agreeing to a freeze.
A spokeswoman for Iran’s oil ministry declined to comment on whether Iran could now consider joining an output freeze.
Some OPEC members said they believe they could seal a freeze deal as early as the week of Sept. 26, when oil producers meet for the International Energy Forum in Algeria. By then, Iran could be closer to 4 million barrels a day, OPEC delegates said.
Venezuela’s Oil Minister Eulogio Del Pino has contacted the cartel’s Secretary-General Mohamed Barkindo to propose a discussion on coordinating output, the country’s president Nicolás Maduro said Thursday, according to state news agency Agencia Venezuela de Noticias.
Wilson Pastor Morris, Ecuador’s OPEC envoy, is also set to meet Mr. Barkindo later on Friday in Vienna, according a person familiar with the matter.
Ecuador “will request a meeting to discuss coordinating production on the side of the IEF meeting,” the person said. “It’s now becoming necessary” with the drop in oil prices.
Breathing life into talk of an output freeze is also getting support from OPEC’s traditional powerhouses in the Persian Gulf. Saudi Arabia and its Persian Gulf allies will support any cooperation between OPEC and nonmembers as they don’t want prices to fall further, according to people familiar with the kingdom’s policy.
The renewed talk of an oil-production freeze comes as crude prices remain stuck at levels far below what most OPEC nations need to balance their budgets. Brent, the international benchmark, has fallen about 17% since June, when it reached a high of over $52.
Oil prices on Friday fell further, with Brent down 1% in London trading at $43.84.
In June, when prices were just above $50 a barrel, Saudi Arabia’s energy minister Khalid al-Falih told reporters that the price then was too low. He also said prices of $100 to $110 were too high, causing a flood of supplies that sent the market screeching into a two-year long route.
The ideal price is “somewhere in between,” he said. “And unfortunately we will go through cycles to find this out, it will not be a straight line.”
The production freeze was an idea that had helped send prices rallying more than 50% from 12-year lows last winter.
Some OPEC delegates said they don’t expect a decision or recommendation to be made during the side meetings in Algeria.
Much would depend on whether Russia participates. Russian officials were angered when Saudi Arabia suddenly switched its position in Doha and opposed a deal, scuttling weeks of negotiations.
The Russian energy ministry said Friday: “No official proposals from OPEC or Venezuela on the organization of a meeting of oil-producer countries have been received at the current time.”