OREANDA-NEWS. June 08, 2015. There has been much talk this week in Vienna about the desirability of coordinated action by OPEC and non-OPEC producers, but if any OPEC ministers have been crossing their fingers in hope of some kind of pact that would involve output curbs from mighty independent producer Russia, they might as well uncross them right now.

Dynamics of supply and demand will balance world oil markets, and any coordinated action to cut supply would have a detrimental effect in the longer term, Russian energy minister Alexander Novak said.

And he said it on the sidelines of an OPEC international seminar in the Austrian capital just two days ahead of the oil producer group's ministerial conference.

"...We received some requests to cut," Novak told reporters, without specifying which countries had made the requests. "But we believe that market-based factors will bring supply and demand into equilibrium," he said.

In any case, he added, "such mechanisms would be of a short-term nature and would be detrimental in the longer run."

Novak had already said last week that he did not believe global production cuts were needed to balance world oil markets, which were already showing signs of stabilizing. Brent oil prices have traded close to \\$65/b since mid April.

Russia currently pumps more oil than Saudi Arabia, producing an average 10.71 million b/d in May and continuing a trend of rising output over the past decade.

Novak isn't the only minister to have expressed optimism about the oil market this week.

On June 1, Saudi oil minister Ali Naimi said demand was growing and supply slowing.

Kuwaiti oil minister Ali al-Omair, quoted by state news agency KUNA on June 2, also said he expected oil prices to improve at the end of the year on the back of economic growth and higher demand.

Indeed, he said, the oil market is currently "balanced and does not witness any lack or surplus in output."

The UAE's Suhail al-Mazrouei was more cautious. He said on June 3 that the oil supply "glut" had decreased considerably and that he was optimistic about the second half of the year.

Qatari oil minister and alternate OPEC president Mohammed al-Sada also said he expected the market to become more balanced later this year.

"Looking at the oil market today, there are a number of reasons to feel optimistic about the general situation.

The global economy is showing encouraging signs and oil demand is improving," he told the seminar. But, he warned, "we are not out of the woods yet."

In OPEC's case, there's one particular concern in the shape of a potential flood of additional Iranian barrels if Tehran and six world powers strike a nuclear deal at the end of this month.

Space for Iran

Oil minister Zanganeh said June 3 he would formally tell OPEC in week that Iran plans to boost its crude output to pre-sanctions levels once sanctions are lifted.

He also said Iran would pump an additional 500,000 b/d of crude "immediately" or within a month of sanctions removal, a volume that would rise to 1 million b/d within six or seven months.

OPEC, he said, will be expected to accommodate this increase.

"It's clear what we expect from OPEC. It has a production ceiling and it should accommodate us so that [the ceiling] remains at the same level," Zanganeh said.

There are no individual country quotas under the 30 million b/d ceiling, which has been in place since the beginning of 2012 and is intended to cover production from all 12 members.

Iran was pumping around 3.7 million million in 2011, according to Platts estimates.

But in mid-2012, the United States and European Union imposed a raft of sanctions directly targeting Tehran's oil revenues.

Exports dropped to around 1 million b/d from pre-sanctions levels of 2.2-2.3 million b/d and production to around 2.85 million b/d.

Zanganeh held talks with the heads of a number of international oil companies on June 3 in Vienna, including the CEOs of Total and Russia's Lukoil, as well as having a meeting with the oil minister from India.

He was also due to meet with the heads of Shell and Italy's Eni.

Iran is looking to attract foreign investment back to the country once international sanctions against Tehran are lifted, possibly as soon as the end of this month, and has also prioritized Asia for increased crude exports in the future.

The June 5 OPEC meeting is expected to result in another rollover of the ceiling, some six months after Saudi Arabia persuaded the group that to cut production in support of plunging oil prices would mean the transfer of further market share to non-OPEC producers.

Since November, OPEC output has been climbing, averaging 30.93 million b/d in May, according to Platts estimates.