Zangeneh: Fundamentals behind oil slump

Iran’s Minister of Petroleum Bijan Namdar Zangeneh says market fundamentals are mainly to blame for crude oil price slumps even though political factors cannot be ruled out.

“Surplus oil supply in the market has been the main cause of price declines in recent months, ” he told national television.

He said there is ۲ million bpd of additional oil in the market which is expected to endure in the first six months of ۲۰۱۵.

“This has pushed down prices in the global market, not to mention the projections for August ۲۰۱۴ which had foreseen the situation. ”

Zangeneh, however, said political factors also played a role.

“There is no doubt about political factors having an effect to sustain the situation; but at what percent, one cannot say for sure, ” he added.

The minister said while the United States had seized on the oil price decline to pressure Russia over Ukraine, Iran was less of a target.

“However, we think America and its allies had the intention to deal a blow to Iran, ” he added.

Zangeneh further played down divisions among OPEC members, which came to light after they failed to agree on a production cut in the fact of sagging prices.

He said those members which cite their fear of shale oil to push for lower prices should be given the benefit of the doubt.

“It is not acceptable to wrong a certain minister who says shale oil would leave the market and the market stabilize under low crude prices. It’s not acceptable to accuse him and have a row; rather, we have to wait and see. ”

Zangeneh was apparently alluding to Saudi Arabia, which is opposing any production cut in order to bolster prices.

The minister said despite all the differences, it is more advisable to remain in OPEC.

“I strongly believe that remaining in OPEC is absolutely to our benefit since it is much more convenient to speak from the stand of an organization which produces ۳۰ million barrels of oil per day. ”

Zangeneh further said higher oil prices have three advantages for the world: “Firstly, the production of expensive oil becomes economically viable; secondly, they(higher prices) make renewable energy viable and thirdly, they reduce and optimize consumption. ”