Zangeneh: Iran Will Not Exit OPEC and Must Be Exempt from Production Cuts

On the eve of the OPEC and allied countries' ministerial meeting led by Russia, Bijan Namdar Zangeneh rejected Iran's exit from the Organization of the Petroleum Exporting Countries (OPEC) while stating that the country "must be exempt from any decision regarding OPEC's production levels." According to the IRNA news agency on December 6, Zangeneh responded to a question regarding Iran's "exit" from OPEC by saying: Iran is one of the founders of OPEC and will not leave this organization. This question arose after Qatar recently announced its exit from OPEC ahead of the upcoming meeting in Vienna. Zangeneh reacted to this and stated that his country is "unaware of the reason for this decision" and is "not happy" about it. Many analysts suggest that Qatar's exit from OPEC is due to tensions between the country and Saudi Arabia and its allies, although Qatar has cited its focus on gas and its exports as the reason for its departure. Zangeneh further stated, "Iran has always supported OPEC and its positions for market stability, but at this juncture, as long as Iran is facing sanctions, it will not participate in any production agreements." From Zangeneh's remarks, it appears that Tehran will not engage in decision-making regarding the production cuts of other countries: "Many proposals for production cuts are being raised, and members who wish to reduce their production must decide on that." The Iranian oil minister also refrained from disclosing the amount of Iran's oil production and exports, stating that "this issue would increase pressure from the U.S. on Iran." The Trump administration withdrew from the nuclear agreement made during Barack Obama's presidency between Tehran, Washington, European powers, Russia, and China last spring and reinstated sanctions against Iran in two rounds. The second round of sanctions specifically targeted oil exports. The Trump administration has stated its intention to bring Iran's oil exports "to zero." Meanwhile, the downward trend in oil prices continues, which is the main topic of the December 6 meeting in Vienna, where OPEC and Russian ministers gather to discuss production cuts and the potential increase in oil prices. Reuters reported on December 8, citing informed sources, that Russia is "reaching an agreement" with Saudi Arabia regarding the necessity of oil production cuts. These two countries, along with the U.S., are currently the largest oil producers. However, U.S. President Donald Trump has emphasized that he does not want OPEC to reduce oil production. Trump tweeted yesterday: "I hope OPEC will keep the oil flow at the current level and not restrict it. The world does not need and does not want to see an increase in oil prices." Despite Zangeneh's announcement that Iran "must be exempt from decisions regarding production levels," Tehran has supported production cuts to increase oil prices. Iran's representative at OPEC stated on Monday that if oil production does not decrease, its price will fall further in global markets. OPEC's total production last month reached 33.11 million barrels, showing an increase of about 600,000 barrels compared to May; oil prices have dropped from $86 in early October to about $61 currently. The Iranian oil minister also reacted to reports about the visit of Brian Hook, the U.S. special representative for Iran, stating that if he "wants to exert more pressure on Tehran through OPEC, it is unprofessional." Zangeneh stated, "OPEC is an independent organization and is not part of the U.S. Department of Energy to take orders from Washington." Reports indicate that Hook has traveled to Vienna. While Reuters reported that he met and discussed with the Saudi oil minister, Bloomberg quoted a spokesperson for the Saudi oil ministry as saying, "This news will definitely be denied." Hook stated in mid-November that the United States has been very successful and precise in applying maximum pressure on Iran without allowing Iranian sanctions to lead to a spike in oil prices. The U.S. representative for Iran noted that the "predictable increase" in oil supply in the coming year will help the U.S. demand further reductions in imports from countries importing from Iran. Currently, eight major customers of Iranian oil have received exemptions from the U.S. for their imports, although statistics show that the amount of oil imported from Iran has significantly decreased.