On Tuesday, Kuwait's oil minister Anas al-Saleh delivered a rather stark warning to the rest of OPEC when he said the following about the much ballyhooed crude output freeze: "I'll go full power if there's no agreement. Every barrel I produce I'll sell.”

That was a response to a question about what Kuwait would do if all major producers failed to agree to the freeze. Of course “all major producers” includes Iran and having just now begun to enjoy the financial benefits of being free to sell its oil without the overhang of crippling international sanctions, Tehran isn’t exactly thrilled about the idea of capping production at the current run rate of around 3 million b/d.

As soon as sanctions were lifted, Iran immediately committed to boosting production by 500,000 b/d and said that by the end of the year, it would bring an additional 500,000 b/d of supply online. That would put Iranian production at around 4 million b/d total and, as we noted back in January, would mean the country will be raking in between $3 and $5 billion every month by the end of 2016.

Whether or not those numbers are ultimately achievable is debatable, but the point is, Iran came back to market at a rather inauspicious time. President Hassan Rouhani is attempting to rebuild his country’s economy and Tehran is attempting to attract tens of billions in investments. Taking the foot off the pedal now would be a bitter pill to swallow.

On Sunday, we got the latest from Iranian Oil Minister Bijan Zanganeh and the message was unequivocal: “They should leave us alone as long as Iran's crude oil has not reached 4 million. We will accompany them afterwards."





So based on January’s ouput of 2.93 barrels, we’ve got a ways to go here. One can hardly blame Tehran. After all, the Saudis are producing at a record pace. So are the Russians. And so are the Iraqis. As Reuters writes, “sanctions had cut crude exports from a peak of 2.5 million bpd before 2011 to just over 1 million bpd in recent years.” There’s a lot of lost time (and money) to recover here and if everyone else gets to “go full power” - to quote Anas al-Saleh - then Tehran thinks they should as well.

Zanganeh went on to say that $70 was a “suitable” price for oil. He’ll meet Russian Energy Minister Alexander Novak on Monday. No details about the meeting were available.

So, as we said on Tuesday, “one can forget about a production freeze well into 2017 if not forever since by then at least one if not more OPEC members will be bankrupt.”

This comes as analysts are increasingly split over the prospects for prices. For their part, Goldman called any sustained bounce “self-defeating” as “energy needs lower prices to maintain financial stress to finish the rebalancing process.”

The IEA on Friday called Iran’s return to market “less dramatic” than anticipated and suggested prices may have bottomed. "For prices there may be a light at the end of what has been a long, dark tunnel, but we cannot be precisely sure when in 2017 the oil market will achieve the much-desired balance," the agency said.

We can't either. But what we can be sure of is that even if one wants to characterize Iran's move to ramp production as "less dramatic" than Tehran might have anticipated, their refusal to cap that "less dramatic" production hike at 3 million b/d will cause the likes of Kuwait - which itself churns out 3 million b/d - to refuse to support what is already an exceptionally tenuous proposal to freeze output. And the cumulative effect of the enitre effort breaking down could prove to be quite "dramatic" indeed.