Iran's Zanganeh says 500,000 b/d in new OPEC+ cuts needed, but talks will be political

Vienna — OPEC and its partners need to slash crude production by around 500,000 b/d to clear the oil market's oversupply from the COVID-19 outbreak, Iranian oil minister Bijan Zanganeh said Wednesday.

But he suggested that negotiations ahead will be guided more by politics than market fundamentals.

"Expertise [doesn't] work here. Politics does," he said on arrival in Vienna ahead of OPEC talks. "I believe it is clear that [due to] the oversupply in this situation, especially because of the coronavirus, it is necessary for OPEC and non-OPEC to do something."

OPEC, Russia and nine other allies are scheduled to meet Thursday and Friday to discuss proposals for deeper output cuts. The alliance's 1.7 million b/d production cut accord expires at the end of the month, and an advisory committee has recommended increasing that by 600,000 b/d for at least the second quarter.

Saudi Arabia has urged deeper cuts of up to 1 million b/d, sources have said.

"We should discuss" all options, Zanganeh said. "I do not know about decision but the fact that the supply and demand are not balanced, there is no doubt."

He added that the coronavirus had not impacted Iran's oil industry operations. Iran has been one of the hardest hit countries outside of China by the infection, with more than 2,300 reported cases and 77 deaths.

"We are producing like before," Zanganeh said. "Of course, in transportation, inside the cities, we have witnessed the reduction of consumption."