Oil Price Drop; OPEC Negotiates Halt in Production Increase Plans

As oil prices fall to their lowest level in the past nine months, OPEC and allied countries led by Russia are negotiating to suspend the planned increase in oil production next month. Three sources from OPEC and allied countries told Reuters on Wednesday, September 14, that the group is likely to suspend the plan to increase daily production by 180,000 barrels in October. Brent oil prices fell below $75 on Wednesday, marking the lowest level in nine months. Concerns over weak global economic growth, particularly the slight increase in oil imports from China, the world's largest oil importer, have contributed to the price drop. OPEC and allied countries have extended oil production cuts until fall. Eight members of the OPEC and allied countries led by Saudi Arabia and Russia had previously reduced their daily production by 2.2 million barrels to maintain oil prices and were set to add 180,000 barrels to their production next month without increasing production levels until the end of the year. Now, with the drop in oil prices, these countries are negotiating to temporarily suspend the increase of 180,000 barrels in oil production. Another factor in the decline of oil prices is the political developments in Libya, which have halted the country's oil exports. However, with the rising likelihood of an agreement among factions in the country and the resumption of its oil exports, oil prices experienced a 5% drop on Tuesday. Libya, along with Iran and Venezuela, is exempt from the OPEC and allied countries' production cut agreement. Iranian customs statistics show that the country's oil revenues in August, even before the recent significant drop in oil prices, have declined. The statistics indicate that in August this year, oil export revenues (crude oil, gas condensates, and mazut) were about $3.8 billion, while the average monthly oil export revenue in the first four months of this year was $125 million higher than the previous month. Chinese refineries, unlike those of other countries, pay for Iranian oil at least three months after delivery. Data from the commodity information company, Kpler, which has been provided to Radio Farda, shows that Iran's oil transit to China in May fell by about 40,000 barrels compared to the average of the previous four months, reaching 1,491,000 barrels, which may explain the decline in Iran's oil revenues last month. Despite this, Kpler's statistics indicate that Iran's oil exports increased again in June and even peaked at 1,718,000 barrels in July, indicating higher oil export revenues for Iran in the coming months. The International Monetary Fund has predicted that the Iranian government needs oil prices in global markets to be at least $121 to avoid a budget deficit; a figure that is 40% higher than current global oil prices, and a significant portion of Iran's oil revenue is also lost in the process of circumventing sanctions.