Crude Oil Price Spikes on Reports Iran, OPEC May Cooperate
- Oil prices jump more than 2% as a Reuters report hints Iran may cooperate with OPEC
- Iran may be open to price support measures after production reaches pre-sanction levels
- Major OPEC members’ crude oil output and exports at record historical levels currently
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Crude oil prices spiked 2.6 percent following a report from Reuters that suggested that Iran may be on the verge of cooperating with other OPEC members on price support measures. The report cited unknown members within the industry that are knowledgeable of the situation. Confirmation from Iranian officials is absent thus far. Regardless, the markets seemed to take this as a positive development as next month’s informal meeting of OPEC members approaches.
The Reuters report suggested that Iran would be open to discussing and cooperating with price stability measures once its oil production reaches pre-sanction output of 4 million bpd. In July, Iran produced 3.6 million bpd. Reuters also noted that Iran was a significant roadblock at the previous attempt at a production freeze pact. Russia was mentioned as being more interested in supporting prices.
The idea of a production freeze has repeatedly emerged over recent months even as some of the largest OPEC members are pumping at record levels. In July alone, Saudi Arabia produced 10.67 million barrels a day, the most since the record set in June 2015. Iran’s month-on-month oil production has increased consistently since February 2015. As reported in OPEC’s Monthly Oil Market Report, only 4 of its 14 members saw a reduction in production between May and June.