Iran's Oil Minister Protests Saudi Arabia's Increase in Oil Production

Following Donald Trump's remarks about the Saudi king's readiness to increase oil production by 'two million barrels per day', Iran's oil minister wrote a letter to the OPEC president urging members to avoid unilateral actions outside of collective agreements. According to a report from July 1 on the official website of the National Iranian Oil Company, Bijan Namdar Zangeneh called for member countries to adhere to their commitments and the decisions made by OPEC in conferences 171 and 174, and to refrain from any unilateral actions, as he stated, 'it would harm the unity and independence of OPEC'. The mentioned conferences relate to late 2016 when OPEC members and some other oil-producing countries committed to reducing their daily production by 1.8 million barrels. The subsequent agreement refers to the OPEC meeting two weeks ago, which stipulated that member compliance with production cuts should reach 100%. In recent months, due to production declines in some countries, member compliance with production cuts has been 50% more than the agreed amount, meaning these countries had reduced their daily production by 2.8 million barrels, which should have been increased by one million barrels. However, Iran argues that production increases should only come from countries that have reduced production more than their commitments. Meanwhile, Venezuela, Libya, and Angola, which have faced severe production declines in recent months, are currently unable to increase production. In his letter, Zangeneh stated that 'Iran announced in the joint ministerial committee overseeing the OPEC-non-OPEC agreement that any unilateral increase in production by member countries beyond their commitments would provoke the U.S. to take action against Iran'. After exiting the JCPOA, the U.S. reinstated oil sanctions against Iran, demanding that its customers significantly reduce oil purchases from Iran by November 4. Reports have also emerged of U.S. efforts to encourage Iran's customers to completely cease oil purchases. Iran exports an average of 2.125 million barrels of crude oil daily. Among OPEC members, Kuwait announced yesterday that it would increase its daily production by 130,000 barrels this month. Russia also stated it would increase its production by 200,000 barrels. Saudi Arabia had also indicated it would increase its production by 200,000 barrels this month, but the figure mentioned by King Salman in his conversation with Donald Trump regarding the production increase is nearly equal to Iran's total oil exports. However, neither party has disclosed the timeframe in which Riyadh intends to increase its production by two million barrels. Saudi Arabia has at least two million barrels of excess production capacity, but this capacity has never been utilized, and it remains unclear whether it is practically possible to produce this amount of excess oil.