Oil prices near $60 a barrel could stabilize the energy market and signal for investors to invest and develop petroleum fields, according to a senior executive at a major Iranian state-owned oil company.
Saeid Khoshrou, director of international affairs at the National Iranian Oil Company, told CNBC on Tuesday that low, fluctuating prices in the oil market gave investors the wrong impression.
When oil prices hover near $60, “a lot of investors maybe can invest on developing petroleum fields, but when it’s $45 or $40, it’s a different story,” Khoshrou told CNBC’s “Capital Connection.”
Brent was trading around $59 a barrel on Tuesday afternoon in Asia trade, while U.S. light crude was around $52.
“I think something around $60 would stabilize the market,” he said, adding the price point is “good enough to attract investors to the field, especially in the Middle East, where there are a lot of low cost fields that can easily … be developed, feed the market (and) meet the requirement in the market.”
Iran’s energy exports suffered previously under international sanctions imposed amid concerns that it was developing nuclear weapons. Those sanctions were lifted earlier this year, allowing the OPEC producer to export oil to the international energy market.
The lifting of the sanctions, along with Iran’s low cost of production and untapped energy reserves, make the country a potentially attractive investment destination. But some experts suggest that many major firms are not ready to commit to Iran deals.
Currently, on average, Iran’s cost of production is around $10 per barrel, according to Khoshrou, and he pointed to the ratio between Iran’s oil reserves and production capacity as an indication of why the country is a good prospect for oil investors.