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Iran says sanctions not affecting oil production

George Jahn, Associated Press

Iran's Minister of Petroleum Rostam Ghasemi, left, and Iran's Ambassador to the International Atomic Energy Agency, IAEA, Ali Asghar Soltanieh listen to journalists prior to the start of a meeting of the Organization of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, Austria, Friday, May. 31, 2013. (AP Photo/Hans Punz)

VIENNA (AP) -- Iran's oil minister shrugged off the effects of sanctions on its oil industry on Friday, claiming that a drop in crude exports was being made up for by international sales of gasoline and other refined products.

Oil Minister Rostam Ghasemi spoke Friday ahead of an OPEC meeting held amid new challenges threatening both the organization's unity and its traditional role as the world heavyweight in determining prices and supplies.

The meeting is formally focused on how much oil to pump. With prices largely at acceptable levels, the ministers are expected to maintain the cartel's target at 30 million barrels a day. However, members may be asked to cut back on overproduction, now said to be running at over 500,000 barrels a day.

Beyond prices and output, though, the Organization of the Petroleum Exporting Countries faces more complex issues, including surging shale oil production in the U.S. and a potentially destabilizing spat between Saudi Arabia and Iran.

Iran used to be OPEC's second-largest producer after the Saudis. But a U.S.-led embargo on Iranian crude has, since its inception two years ago, cut deeply into Tehran's oil revenues.

Analyst Sana Abid of KBC Energy Economics said Friday that, based on reported trade figures, Iran's daily production is estimated to have dropped to about 2.5 million barrels a day from 4 million barrels a day before the sanctions.

But Ghasemi told reporters that "production has not changed," although he did not specify over what time period he was talking about. He said any shortfall in exporting crude was being made up by sales of domestically refined gasoline and other products.

Ghasemi did not address traditional rivalries between Iran and the Saudis for Middle East influence that have spilled over into OPEC. Tehran is unhappy with Saudi overproduction, which plugs any gap left by the Iran oil sanctions, thus keeping a lid on prices and benefiting the economy of the United States, Iran's adversary.

The two nations are vying for the position of OPEC secretary general, who runs the organization between ministerial meetings. Iran has put forward Gholam-Hossein Nozari, a former oil minister, while Saudi Arabia is nominating OPEC veteran Majid El-Munif as its candidate.

Present Secretary General Abdullah Al-Badry of Libya has already seen his term extended several times because of the deadlock, perhaps the most visible sign of cracks in the organization's facade of unity.

The rise in shale oil production in the U.S., the world's biggest economy is also a problem for the organization because of the prospect of diminished sales to the world's largest economy.

Shale oil, which is extracted from rocks using heat, helped lift the U.S.'s total output to a daily 7.4 million barrels per day this month. The Paris-based International Energy Agency says total production could top 9 million barrels a day by 2018, which would mean near self-sufficiency for the U.S.

OPEC powerhouse Saudi Arabia and its Gulf partners have the strength to adjust to cheaper oil prices caused by greater supply. Saudi Oil Minister Ali Naimi, on Friday called the extra supply from the United States "a welcome addition to the world."

Others, such as Iran, Venezuela and some African producers, disagree, saying they need the price of oil above $100 a barrel to do business.

"We're very concerned, not just for Nigeria but for Africa as a whole," said Diezani Alison-Madueke, Nigeria's minister of petroleum resources. "Africa does need to have its exports continuously going out, particularly to important export destinations such as the U.S."


Margaret Childs contributed to this report.