Fall in oil prices is a result of ‘treachery’

TEHRAN: Iran’s President Hassan Rouhani said yesterday that the sharp fall in global oil prices is the result of “treachery,” in an apparent reference to regional rival Saudi Arabia, which opposed production cuts. Oil prices have plunged by more than 40 percent since June to less than $70 a barrel, placing severe strain on Iran’s economy, which is already hobbled by international sanctions imposed over its nuclear program. An OPEC meeting last month failed to reach agreement on production curbs, mainly because of Saudi opposition.

Rouhani told a Cabinet meeting yesterday that the fall in prices is at least partly “politically motivated,” the result of a “conspiracy against the interests of the region, the Muslim people and the Muslim world.” “Iran and people of the region will not forget such conspiracies, or in other words, treachery against the interests of the Muslim world,” he said. OPEC controls about 40 percent of the world oil market and Saudi Arabia, the largest oil exporter, produces nearly 10 million barrels a day – a third of the OPEC total. Riyadh has thus far refused to go along with Iran, Russia, Nigeria and Venezuela, all of which want to scale back production to drive prices up.

The fall in prices has mainly been attributed to a US oil boom and lower world demand because of weakened economies. Saudi Arabia is opposed to cutting production because it fears its market share could erode. Saudi Arabia and Iran are longtime rivals who have been fiercely divided over the civil war in Syria, where Shiite Iran supports President Bashar Assad while Saudi Arabia backs the mainly Sunni rebels fighting to topple him.

Oil-for-goods swap
In another development, Iran’s oil minister has denied Tehran and Moscow are close to an agreement on an oil-for-goods swap, the semi-official Mehr news agency reported yesterday. Russia’s Economy Minister Alexei Ulyukayev was quoted on Nov 30 as saying Russia hoped for an agreement soon on a deal to supply grain and equipment to Iran in return for oil, but Iran Oil Minister Bijan Zanganeh told Mehr there was no such plan in prospect. “The idea of bartering Iranian oil in return for Russian commodities (goods) is not true and such an agreement has never taken place between the two countries,” he was quoted as saying. “Iran and Russia have merely agreed on bilateral cooperation in oil and gas industries, based on which Iran will take advantage of Russian firms’ technical and operational capabilities in its oil and gas industries,” he said, according to Mehr.

Russian and Iranian sources told Reuters in January that the two sides were discussing a barter deal worth up to $20 billion that would involve Moscow buying up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods. Such an agreement, if was reached, would enable Iran to significantly raise oil exports despite sanctions over its nuclear program, and give the slowing Russian economy a much-needed boost. But it would also strain relations between Moscow and the West at a time when they are already frayed over the Ukraine crisis.

The United States has warned Russia that an oil-for-goods deal could run counter to nuclear talks between world powers and Iran and might fall foul of US sanctions. Iran and the six powers last month gave themselves seven more months to resolve a standoff on Iran’s nuclear program that has led to economic sanctions being imposed on Tehran, while extending the partial easing of those sanctions that followed an interim agreement. — Agencies