Iran Calls for Restoration of Oil Export Quota System in OPEC

Reports indicate that Iran's representative at the Organization of the Petroleum Exporting Countries (OPEC) requested the reinstatement of an oil export quota system in a letter to the group's meeting last week in Vienna, Austria. According to a report on Saturday, June 13, by the Oil and Energy Information Network, 'Shana', Hossein Kazempour Ardebili, Iran's representative at OPEC, called for a technical formula regarding prices that would restore the quota system and prevent price declines. This comes just two days after Iran's Oil Minister Bijan Zangeneh announced in a letter to OPEC that the Islamic Republic would restore its oil production to pre-sanction levels 'in a very short time' following the lifting of Western sanctions. At the conclusion of OPEC's 167th meeting in Vienna, oil ministers from member countries extended the daily production ceiling of 30 million barrels for another six months without change. In a statement on Friday, June 15, the organization emphasized that the 12 OPEC member countries reached a consensus on maintaining the daily production ceiling and urged members to adhere to this limit. Following the announcement of the OPEC production ceiling stabilization for the next six months, global oil prices saw a slight increase, with Brent crude oil for July delivery rising by 0.6% to $62.40 per barrel. According to Reuters, while OPEC has set a production ceiling of 30 million barrels per day for its members, in practice, the members of this group produce more than this amount. Iran's request for the restoration of the quota system could allow the country to return to the market, but this would require other OPEC member countries that have taken Iran's market share to reduce their production. In this context, Mehdi Asali, director of OPEC affairs and energy relations, told 'Shana': 'Although there have been no changes in OPEC's quota determination in past years and the production quota system has been effectively set aside, the determination of production ceilings for OPEC members has somewhat prevented severe price declines, and competition has remained within the 30 million barrel range.' He added: 'If Iran wants to add one million barrels to its export capacity and OPEC members do not pay attention to this issue, those who have taken Iran's share and increased their production will undoubtedly suffer losses. If we add one million barrels to the market and they do not pay attention to this issue, they will certainly incur losses.' Before international sanctions due to its nuclear activities, Iran exported 2.5 million barrels of oil daily and produced about 3.7 million barrels. However, after sanctions, Iran's oil exports dropped to about one million barrels per day. According to a monthly report by the International Energy Agency published on June 21, Iran's oil exports reached 1.4 million barrels per day last month, marking a record since the implementation of Western sanctions against Iran in mid-2012.