Increase in OPEC Production: Alignment with US Sanctions Against Iran

The recent decision by the Organization of the Petroleum Exporting Countries (OPEC) to gradually increase crude oil supply by up to one million barrels per day is a preventive measure. This prevention aims to compensate for the anticipated decrease in Iran's oil exports by one million barrels per day before the renewal of US nuclear sanctions against Iran. Shortly after OPEC announced its decision to increase production capacity and supply crude oil to the market, the US government took a new step in its maximum pressure campaign against the Islamic Republic, declaring that none of Iran's oil buyers would be exempt from sanctions. The Democratic administration of the US, after announcing unilateral sanctions in 2012, which were also enforced by the European Union, exempted Turkey from the sanctions on purchasing Iranian oil and adopted a regime encouraging Asian countries to reduce their oil purchases from Iran rather than cutting them off completely. OPEC's recent decision, which was made under the guidance and policymaking of Saudi Arabia during the semi-annual meeting of the oil ministers of 14 member countries, despite the opposition of Bijan Zanganeh, Iran's oil minister, also garnered implicit and unofficial approval from non-OPEC countries, including Russia. Despite being aware of the US's strict policies, the Islamic Republic continues to strive to convince EU member countries to continue purchasing Iranian crude oil after November 3, maintaining its current export volume of about 1.8 million barrels of oil and its share in global markets. The Iranian government expects that by the end of this month, the EU's 'proposed package' to encourage Tehran to remain in the 'JCPOA' will emphasize the continuation of oil exports to Europe, insurance for oil shipments, and maritime transport facilities for the shipments. Despite these efforts, Iran's oil export ceiling has decreased in recent weeks, and the rise in global oil prices has created new concerns among major oil product importers and consumers. Ensuring compensation for the reduction in crude oil supply from Iran, Venezuela, and Libya is one way to counter the market's psychological reaction and stabilize prices, which fluctuated around $75 per barrel in the days leading up to the OPEC meeting on June 22. The effects of rising oil prices in the US are felt most acutely among American consumers, who fear that if prices reach $80 per barrel, gasoline prices will rise to $4 per gallon. The increase in oil product prices, in addition to causing inflationary effects, could lead to dissatisfaction among American consumers, and this discontent, especially in the weeks leading up to the midterm elections in November, has political sensitivity. Republicans are determined to maintain their majority in both the House of Representatives and the Senate, and with this image in mind, Donald Trump requested an increase in crude oil production and supply from the Union before the recent OPEC ministers' meeting, and producing countries responded positively to the US request. Bijan Namdar Zangeneh, after the OPEC meeting, described OPEC's agreement to increase production as 'implicit' and lacking certainty and specific figures, claiming that the US has not achieved its goal of increasing production and supply of oil before the sanctions against Iran become official. In 2016, to prevent oil prices from falling below $40 per barrel, 28 OPEC and non-OPEC countries, led jointly by Russia and Saudi Arabia, two of the world's largest oil producers, decided to reduce their production by 1.8 million barrels per day from 2017, stabilizing oil prices initially, which then gradually increased by about 60% and has now reached $75 per barrel. Although rising oil prices lead to new investments in oil production, and the US, as a pioneer in shale oil extraction, will benefit from this situation, stabilizing oil prices at current levels keeps both oil producers and consumers in the US satisfied. Iranian oil, which is the biggest victim of the Islamic Republic's nuclear programs and the resulting sanctions, has lost more than one million barrels per day in exports since 2012 after the imposition of unilateral US and European sanctions. With the announcement of the US withdrawal from the nuclear agreement, Iranian oil has once again been subjected to nuclear sanctions, and it was predicted that Iran would lose about one million barrels of its exports to Europe and Asia by November of this year. The simple concept of a one million barrel per day reduction in oil exports translates to a loss of up to $25 billion in annual foreign exchange earnings for Iran, which in turn will exacerbate the country's already crisis-ridden economy. With the implementation of stricter US sanctions, while crude oil exports will not be completely cut off, they could decrease to 600,000 to 700,000 barrels per day. Iranian officials, while emphasizing the continuation of missile programs and maintaining their military presence in the region, threaten to withdraw from the nuclear agreement while simultaneously urging Europe and Asian countries to remain committed to purchasing oil and continuing trade with Iran. It can be assumed that the Japanese Prime Minister, during his upcoming visit to Tehran, will remind the Iranian government officials that, similar to European companies such as Total and Shell, Japanese companies also find themselves compelled to reduce or cut off their purchases of Iranian oil, and the threatening announcement of Iran's withdrawal from the nuclear agreement will not only fail to change the market situation but could also create conditions for further reducing Iran's oil exports through increasing ongoing tensions.