Russia: OPEC Members Are Dissatisfied with Iran's Oil Production Level

While the President of Russia has supported an increase in Iran's oil production twice in the past week, the country's Minister of Oil states that OPEC members are dissatisfied with Iran's oil production level. On Monday, September 15, the TASS news agency reported that Alexander Novak, the Minister of Energy of Russia, stated that OPEC members do not agree on whether Iran's current oil production level has returned to pre-sanction levels. According to him, 'there are some disagreements regarding the figures in OPEC, which is a normal issue.' Novak did not clarify what the discrepancies in figures refer to, but Iran claims that it had a share in OPEC production before the sanctions, which it wants to restore. OPEC members abolished specific quotas for each member at the end of the last decade, and in 2013, it was decided that OPEC's production ceiling would remain at 30 million barrels per day. However, two new members have joined OPEC since then. Currently, OPEC's actual production is close to 33.7 million barrels per day, which significantly differs from the OPEC production ceiling. Additionally, there is a discrepancy between the figures Iran provides for its oil production and those reported by international organizations. Iran claims to have increased its daily oil production to 3.8 million barrels, while international assessments, including those from OPEC itself, indicate that Iran's oil production is around 3.6 to 3.7 million barrels per day. In 2008, Iran produced 3.9 million barrels of oil daily, which fell below 3.7 million barrels in 2011, before the Western sanctions against the Islamic Republic's nuclear program. Iran asserts that it will raise its oil production to four million barrels per day in the next two to three months, which would match its pre-sanction production level, a claim that does not align with OPEC's estimates. Novak mentioned that due to discrepancies regarding the figures, OPEC members review production levels, plans, and the organization's ceiling twice a year. He stated that Iran will likely join the oil freeze plan after returning to pre-sanction production levels. Putin's renewed support for increasing Iran's oil production came on Monday when he stated for the second time in a week that 'justice dictates that Iran should be allowed to increase its oil production to pre-sanction levels.' According to Reuters, Vladimir Putin, after the G20 summit in China, said in a press conference that Iran's current oil production is only slightly less than its production before the sanctions, and it is fair to allow the country to reach its pre-sanction production levels since it would not be a high figure. In this context, the Interfax news agency reported that ahead of the OPEC meeting and some non-OPEC producers, Russia and Saudi Arabia negotiated on the oil freeze issue. The focus of the Algeria meeting, which will be held on September 28 among OPEC members and Russia, is on the oil freeze. Mohammad Barkindo, the Secretary-General of OPEC, met with officials from Qatar and Algeria on Monday and is expected to visit Iran to encourage Tehran to join a joint action to raise oil prices. The energy ministers of Saudi Arabia and Russia signed a joint statement on Monday for cooperation in stabilizing oil prices in global markets, which raised the price of this commodity by up to one percent. This statement has strengthened the possibility of an agreement between the two countries for an oil freeze. Putin stated in the press conference that despite the unfairness of current oil prices, Russia is satisfied with global oil prices. Putin's remarks come as Russia, alongside Saudi Arabia, produces 10 million barrels of oil daily, which has seen a price drop of about 60 percent compared to the first half of 2014. Russia also exports more than 150 billion cubic meters of gas annually, the value of which has significantly decreased due to the drop in oil prices. The price of a thousand cubic meters of Russian gas has reached about $170 in the first eight months of 2016, while in 2013, this price was $380. Nevertheless, TASS reports that after the signing of the joint statement between Riyadh and Moscow, the value of the Russian currency (ruble) increased by about 0.24 percent against the dollar and by about 0.31 percent against the euro. The value of the ruble has significantly decreased over the past four years. In 2012, one US dollar was about 30 rubles, while now it is about 65 rubles. Western sanctions against Russia due to the annexation of Crimea, along with the drop in oil prices, have severely reduced the value of the ruble.