Reuters: Iran Seeks OPEC Support Against US Sanctions

On Wednesday, June 9, Reuters reported on an official letter from the Iranian Minister of Oil to OPEC, seeking the organization's support against US sanctions. There has been no report in any domestic media regarding Bijan Zangeneh's 'official letter' to the OPEC presidency, but Reuters claims to have seen the letter. In this letter, Zangeneh also mentioned that he disagrees with Saudi Arabia's proposal to increase oil production and wants OPEC to address the issue of sanctions at its upcoming meeting. After Donald Trump announced his government's withdrawal from the nuclear agreement known as the JCPOA in mid-April, his new Secretary of State announced the imposition of 'the toughest sanctions' against Tehran. This announcement prompted foreign companies, including oil companies, to halt their activities in Iran to avoid becoming victims of US sanctions. In this context, as part of Iran's efforts to maintain foreign investments in the country, the Iranian Minister of Oil granted the French company Total two months to negotiate with the US. In Zangeneh's letter to OPEC, it is stated that Iran 'seeks OPEC's support in accordance with Article 2 of the organization's charter, which emphasizes the preservation of the interests of member countries both individually and collectively.' Zangeneh addressed his letter to his Emirati counterpart, Suhail Al-Mazrouei, who holds the OPEC presidency in 2018. According to Reuters, Al-Mazrouei proposed two options in response to this official letter: to raise the issue at the OPEC meeting in November, six months later, or to address it as a 'miscellaneous item' in the upcoming meeting. Since the implementation of the JCPOA, which lifted or suspended a large part of Iran's oil sanctions, Iran has not been able to increase its oil production above four million barrels per day due to a lack of new projects and the caution of foreign investors. Meanwhile, last week, the energy ministers of Russia and Saudi Arabia expressed readiness to increase production 'to alleviate concerns of their customers.' Thus, if a decision is made to increase production at the upcoming OPEC meeting in June, Iran will struggle to increase its production and will also suffer from price decreases following the production increase. On Wednesday, Reuters reported from oil sources in Switzerland that Iran's oil exports in May, this month, decreased by about one hundred thousand barrels per day. According to this report, Iran's oil exports in April, last month, were about two million six hundred thousand barrels per day, and this amount decreased to two million five hundred thousand barrels this month. Oil prices in global markets reached over $80 per barrel this month, the highest price since the end of 2014. After Saudi Arabia and Iraq, Iran is considered the third-largest oil producer in the Organization of the Petroleum Exporting Countries, OPEC.