Iran's Protest to OPEC: No Country Can Take Others' Oil Export Quotas

Iran's permanent representative to international organizations in Vienna emphasized the necessity for OPEC to remain apolitical during a meeting with OPEC Secretary General Mohammad Barkindo. He reminded that "no country can take the production and export quotas of other member countries under any circumstances, and no authorization has been issued by the ministerial meeting for such actions." According to a report on Sunday, August 19, by Shana news agency, affiliated with the Ministry of Oil, he continued by stating that OPEC must implement the decisions of the ministerial meeting carefully and without interpretation. Kazem Gharibabadi's reference to the ministerial meeting pertains to the last round of meetings of oil ministers from member countries of this organization on June 22 of this year, where it was agreed that "the compliance rate of OPEC members and allied countries with oil production cuts should reach one hundred percent." Previously, OPEC members, along with several other oil-producing countries led by Russia, had agreed to reduce their daily production by about 1.8 million barrels since the beginning of 2017 to increase oil prices. However, in the spring of this year, production from some member countries, such as Venezuela, Angola, and Libya, fell to a level where their daily production effectively decreased by 2.8 million barrels. The necessity for members of this agreement to return to a one hundred percent commitment meant an increase in daily oil production by one million barrels, but the OPEC ministers' agreement did not specify how this increase should be implemented, leaving room for interpretation. Saudi Arabia, Russia, and many members of this agreement believe that other members can compensate for the production declines of other members, but Iran argues that only countries that have reduced production excessively are permitted to increase oil production. Some members of the mentioned agreement, such as Saudi Arabia, Russia, and some Arab Gulf countries, have significantly increased their production, leading to a wave of protests from Iranian officials, from the Minister of Oil to Iran's representative in OPEC. Russia's oil production also reached 11.2 million barrels per day last month, which is 250,000 barrels more than its quota based on the oil production cut agreement, and it is seeking to add another 100,000 barrels to its production soon. OPEC expressed satisfaction with the production increases of some countries. However, the committee overseeing the decisions of OPEC members, which includes a representative from Russia, met on July 18, almost a month after the agreement of the oil ministers, and expressed "satisfaction and happiness" with the production increases of some countries. According to the official OPEC website, this committee was pleased to see the compliance rate of OPEC members reach 121 percent in June. In July, daily production increased by nearly 41,000 barrels again. The oil production of other members of the agreement, such as Russia and Kazakhstan, has also increased to the extent that the total compliance rate of all members of the agreement has now reached one hundred percent, and oil prices have dropped from around $80 in late spring to below $72. OPEC statistics indicate that the production of Venezuela, Libya, and Angola has not only not increased from spring this year to last month but has collectively decreased by 363,000 barrels per day. Iran's oil production has also dropped by 85,000 barrels per day. Despite these declines, the increased production from other OPEC members has raised the total production of the organization. The committee overseeing the decisions of OPEC members is set to meet again on August 20. The OPEC oil ministers' meeting will also be held next month in Vienna, the headquarters of this organization. Iran's opposition to the production increases of some countries seems to reflect the Islamic Republic's concern over the continued decline of its oil production due to the return of U.S. sanctions. Over the past two months, according to OPEC statistics, Iran's daily oil production has decreased by more than 85,000 barrels, and it is expected that with the implementation of U.S. oil sanctions in November of this year, the country's oil production and exports will sharply decline. Saudi Arabia and some Gulf countries, Russia, and the U.S. itself have the highest capacity to increase oil production to compensate for Iran's production decline. Mr. Gharibabadi, in his meeting with the OPEC Secretary General, referred to "the unilateral, illegal, and illegitimate actions of the U.S. following its withdrawal from the JCPOA, including the reinstatement of unilateral and oppressive sanctions against Tehran" and stated: "No country can take the production and export quotas of other member countries under any circumstances, and no authorization has been issued by the ministerial meeting for such actions, and the technical conditions of other countries do not indicate such capability." Gharibabadi stated that Iran believes OPEC should firmly support its members at this time and prevent the plans and actions of countries seeking to politicize this organization. Iran had previously called for a condemnation of the U.S. at the OPEC ministers' meeting on June 22, but OPEC rejected this request.