DUBAI, United Arab Emirates -- Iran has expressed support for efforts among oil-producing nations to cap output yet stopped short of joining the pact, trying to decide the best way forward as it re-enters the international market.
Saudi Arabia, Venezuela, Qatar and Russia struck an agreement Tuesday to freeze production at January levels. But the agreement between the three OPEC members and Russia is contingent on other major oil producers taking similar steps.
In an effort to rally support for the agreement, oil ministers from Venezuela and Qatar met with Bijan Zanganeh, their Iranian counterpart, on Wednesday.
"This cooperation between OPEC and non-OPEC members to stabilize the market is good news. We support any effort to stabilize the market and prices," Zanganeh was quoted as saying after the meeting.
But many remain skeptical that Iran will actually commit to a freeze on production at this stage.
The Middle Eastern country has seen its oil production fall to 2.8 million barrels a day, three-quarters of the level seen in 2011, before the U.S. and Europe stepped up economic sanctions to force Iran to give up its nuclear weapons program. As those sanctions were lifted last month, the country has just decided to boost its oil output by 500,000 barrels a day. Meanwhile, Saudi Arabia and Russia are each producing record levels of more than 10 million barrels a day.
The Iranian government sees little incentive to sign on to the effort, but Tehran could be blamed for helping to perpetuate low oil prices if it refuses outright to cooperate.
At the same time, Iran does not want oil prices to fall further, since it would mute the effect of its production hike. Furthermore, an International Energy Agency estimate suggests that Iran cannot sustainably produce more than 3.6 million barrels a day due to its aging production infrastructure.
These realities make market players hopeful that Iran will join in the efforts to rein in production if Saudi Arabia and Russia offer some concessions that are advantageous to Tehran.
In fact, Zanganeh hinted at Iran's willingness to engage in negotiations, commenting after the meeting that the agreement between Saudi Arabia, Russia, Venezuela and Qatar "is the first step and other steps should also be taken."
Iran and Saudi Arabia are not on speaking terms, following a suspension of diplomatic ties last month. But the fact that Riyadh and Moscow have managed to strike an agreement to freeze production despite standing poles apart over the Syrian conflict shows that the prolonged oil price slump is causing enough damage to compel them to set aside political differences. In this climate, Iran may be swayed with just the right kind of inducement.