Iran’s President Hassan Rouhani had his Mario Draghi moment after he basically said that crude oil producing countries should do whatever it takes to raise and stabilize oil prices. The quote, directly from a Reuters article, read, “All countries should help the committee of experts to make decisions in the November summit that raises oil prices.” 

He also added that OPEC members should negotiate with non-OPEC producers to stabilize the market. It appears Iran’s president is not only on board with the OPEC deal but his proclamation suggests there is a commitment by Iran and other OPEC nations to increase prices.

Still, for Iran it is a little easier to be committed as they were granted latitude and it will be Saudi Arabia that will have to do most of the cutting of production. Besides, as Reuters reported, Iran's crude oil and condensate sales have likely approached levels last seen at peak time in 2011 before western sanctions were imposed.

Oil Price reports that Iran has officially reached the four million barrel-per-day crude production mark less than three quarters after reentering global oil markets, according to Ali Kardor, the managing director of the National Iranian Oil Company. While I doubt those numbers are accurate, there is evidence that Iran's output is rising.

Bloomberg is reporting that the National Iranian Oil Co. agreed to the framework of a $2.2 billion deal with Persia Oil & Gas Industry Development Co. to boost output at three fields along the country’s western border with Iraq, Oil Minister Bijan Namdar Zanganeh said during a ceremony at the ministry. Zanganeh has said the new type of contract, designed to better reward investment in crude and natural gas production, is crucial to increasing the country’s long-term export potential.

Although it may take years for new investment deals to bear fruit. President Hassan Rouhani’s government has argued that it should be allowed to return production to levels achieved before international sanctions curbed shipments, according to Bloomberg. So it will be easy for Iran to say it will do whatever it takes because they will not have to do much. But from a larger perspective it does not change the fact that this OPEC deal will put pressure on Iran to cap production at pre-sanctions levels or risk starting a new production war.

This comes as doubts about reported Russian oil production are raised. InvestorVillage reports that, “In essence, Russian oil production was flat year-over-year, aggregating the top 4 oil producers based on the latest reported public data. In September the new Russian oil production increased by only 400,000 barrels per day year-over-year. If Russia is struggling to increase output, then the likelihood that they will agree to freeze output at a higher level than they are currently producing will be an easy thing to do.

Of course, the key is that we will see production restraint at a time when demand is rising. Even with less than spectacular global growth demand continues to set records. As we start to see the impact of a reduction in Cap x spending and the lingering impact of the least amount of oil discoveries in 60 years, we could achieve market balance by the end of this year, if not sooner.

But the crude oil market also has to deal with the strength in the dollar. Concerns about the Brexit timing is causing a big drop in the British pound that is hitting a three year low. British Prime Minister Theresa May's proclamation that she would formally start the country’s exit from the European Union by the end of March, 2017 is raising concerns about a hard landing. So as the dollar rises, oil struggles despite the strong support from the historic OPEC deal.