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Analysts Examine Iran, Venezuela Oil Sales

FILE: An Iranian oil worker walks in Tehran's oil refinery south of the capital Tehran, Iran. 12.22.2014

Analysts are divided over whether a proposal by the then-Secretary General of the Organization of the Petroleum Exporting Countries (OPEC) that Iran and Venezuela be allowed to sell oil on the global market should be considered.

At an energy summit in Abuja on July 5, then-OPEC chief Mohammad Barkindo proposed that Iran and Venezuela be allowed to sell oil amid skyrocketing prices and production decline due to sanctions imposed on Russia for invading Ukraine.

Both nations have some of the largest oil reserves on earth, and could potentially release between 2 and 2.5 million barrels of oil per day on the global market.

Azerbaijan-based Center of Analysis and International Relations board member Esmira Jafarova said that because for the first time OPEC ''hit the bottom when it comes to its spare capacity'' - the ability to produce and export more oil in its 62-year history - the Secretary-General may have proposed allowing Iran and Venezuela to sell oil purely from a market perspective and to alleviate the sufferings of the international community and meet rising global demand for oil.

She added "The statement was essentially to detach the political realities - geopolitical dictates from the economic and energy considerations.''

The analyst said "I would probably say technically and purely from a market perspective it could be a good idea because of (increasing) demands, rising oil prices, market instability, and Russia's declining output because of sanctions."

For Jafarova, it is hard to say if the proposal by Barkindo is a widely-held belief in the leadership of OPEC.

''It is inherent on the part of the leaders of the organization to make proposals and then try to negotiate with other member states. There's an incoming new Secretary General - (Haitham al-Ghais, a Kuwaiti), and so we will have to wait and see what will be the position of the new Secretary General.

Raymond Nuworkpor, an Energy Markets Analyst at Ghana-based Institute for Energy Securities told VOA that ''with escalating prices of crude products, every card is on the table including the push for Iran and Venezuela to get back in the game.''

The energy markets analyst added ''Unquestionably, for (Mohammad Barkindo) to go public on such an important issue, it is obvious, that there is an ongoing conversation among the players in the energy market circle. If the crisis (referring to the conflict in Ukraine) continues to persist, we may see positive developments regarding this issue.''

Nuworkpor also stated the need for a structure controlling the return of this sanctioned oil to the marketplace: ''Careful consideration should be given to the proposal and a legitimate framework should be initiated to guard and guide the process of bringing back crude oil from Iran and Venezuela onto the energy markets," he stated."

"Energy is the economy, and oil supply constraints only further energy poverty and worsen economic woes for women and children," Nuworkpor noted.

But while he considers whether OPEC should make this move, he also says ''Human rights and security cannot be sacrificed for energy security. But the fact that Russia is being encouraged to pump more oil into the market despite the atrocities it is committing in Ukraine, then Iran and Venezuela's cases are particularly worth considering'', he said.

OPEC Secretary-General Bartkindo died suddenly earlier in July. The new OPEC chief, Haitham al-Ghais, takes over in August.

The 31st OPEC and non-OPEC meetings will take place on August 3. It is not known yet if the Barkindo proposal will be on the discussion agenda.

VOA made several attempts to get an official reaction from OPEC, and as at the time of filing this report, there's been no response.