Potential return of Iranian oil should not worry markets, Opec secretary general says

Mohammed Barkindo strikes note of cautious optimism as he forecasts strong oil market rebound in 2021

Opec secretary general Mohammed Barkindo said Opec+ is taking a 'flexible' approach to market corrections. Credit: Opec

The possible return of Iranian oil exports after Joe Biden's victory in the US presidential elections should not be a concern for energy markets, according to the secretary general of Opec.

Mr Biden is expected to back the easing of sanctions against Iran, reversing four years of the Trump administration's "maximum pressure" policy that reduced Tehran's oil exports to zero.

"We have established a record of continuously adapting ... being flexible and addressing issues as they emerge," Mohammed Barkindo told the Gulf Intelligence Global UAE Energy Forum 2021 on Wednesday.

He was referring to the decision by the Opec+ group of producers to increase production in the second half of 2018, in response to the US move to exit the Iran nuclear deal and impose sanctions on Tehran.

"I cannot pre-empt what will happen," Mr Barkindo said.

"We are also following very closely these developments. But rest assured that there is no need for the market to [have any] heightened concern at the moment."

His comments come as a nascent rebound in energy demand risks being derailed by a second wave of lockdowns in Europe and a sharp rise in infections in China – one of the world's largest crude consumers.

Opec+, the international coalition of producers led by Saudi Arabia and Russia, has been undertaking market corrections since 2016.

The group agreed last month to draw back 7.2 million barrels per day from the beginning of the year.

Opec+ has also been playing a key role in stabilising oil markets amid the Covid-19 pandemic.

Oil prices have increased by 10 per cent since the beginning of the year, supported by Opec+ action, the distribution of vaccines, a weak dollar and optimism over fresh stimulus in the US.

Brent, the international benchmark, reached $57.4 per barrel earlier on Wednesday, before softening to $56.48 per barrel at 7.41pm UAE time.

West Texas Intermediate, the main US gauge, was up 0.19 per cent, trading at $53.31 per barrel.

Mr Barkindo also struck a note of "cautious optimism" and said oil markets were poised for a "strong rebound in 2021".

He said Opec+ was taking a "flexible" approach to market corrections.

The group, which earlier planned to bring 2 million bpd back to the market by the beginning of the year, paused the decision to account for the second-wave of lockdowns imposed across several developing countries.

Saudi Arabia, the largest exporter within the group, also committed to a voluntary reduction of 1 million bpd for two months until March, which caused oil markets to rally.