Oshiro Associates: Recent returnee to the global oil markets, Iran, has dealt a blow to the fledgling plan that could see global oil production frozen at January 2016 levels.

An official at the country’s oil ministry said that Iran would not be willing to participate in any plan or initiative to cap production until such time as its own production levels had reach 4 million barrels per day.

Madhi Asali said that low oil prices were the result of oversupply and that it was the responsibility of the larger producers like Saudi Arabia to cut production to support prices.

“At first glance, that stance might appear selfish but one has to remember that Iran has only recently had sanctions lifted by the international community. It has a battered economy to rebuild and oil sales are a major part of that plan,” said an Oshiro Associates commodities analyst. “They just have a different set of priorities right now.”

Since Russia, Saudi Arabia, Qatar and Venezuela first proposed the output freeze last month, 11 more OPEC and non-OPEC members have signaled their willingness to join the effort to help draw a line under prices that have fallen to as low as $26 a barrel this year.

Saudi Arabia, the de facto leader of OPEC, has flatly refused to cut production to support prices preferring, instead, to call on high-cost US shale producers to reduce their output. The strategy appears to be working with the latest Baker Hughes rig count showing a record low number of US drilling rigs in operation.

“The proposed cap on output has pushed prices up but that could be a double-edged sword,” said the Oshiro Associates analyst alluding to the possibility that higher prices could tempt US drillers who shut down production to restart operations.