OPEC Cancels Next Month's Meeting for Better Assessment of Iran Sanctions

The meeting of the OPEC monitoring committee and allied countries, which was scheduled to take place next month, has been canceled to achieve a better assessment of the impact of U.S. sanctions against Iran and the crisis in Venezuela. This committee meeting, which includes the oil ministers of several OPEC member or allied countries, was set to begin on April 17, but Khalid al-Falih, the Saudi oil minister who chairs OPEC, announced on Monday, March 18, in Baku that the April meeting has been canceled and the next committee meeting will be held in May. The main OPEC meeting regarding the 'oil production cut agreement' will take place in mid-year in June, and the monitoring committee was supposed to hold a meeting in April to assess the future of the oil market. Khalid al-Falih, who traveled to the capital of Azerbaijan to participate in the joint committee of OPEC member and non-member countries, told reporters on Monday: 'It is too early to assess the future of the market, and the issue of extending or canceling production cuts is better discussed in the June meeting.' However, the 'monitoring committee' will meet in May, and according to OPEC's official website, the next meeting of this committee will be held on May 25 in Jeddah, Saudi Arabia. According to this report, no significant changes are expected in the global oil market in the next two months, and there is no need for an OPEC members' meeting in April. OPEC and its allied countries agreed late last year to reduce their daily production by about 1.2 million barrels until mid-2019 to raise oil prices. The 'monitoring committee' is responsible for assessing the compliance of countries with this agreement and providing an estimate of the global oil supply and demand trends. This committee announced that compliance with the production cut agreement in February was 90%, which is 7% better than the previous month. OPEC members are expected to decide in the June meeting whether to extend or cancel this agreement. The U.S. government, after withdrawing from the JCPOA and reinstating all sanctions against the Islamic Republic, granted an exemption to eight Iranian oil customers for six months to reduce oil purchases from Iran to near zero. This six-month exemption will end in April. Reports indicate that Saudi Arabia is apparently waiting to see what decision the U.S. will make regarding the continuation or termination of this exemption. Reuters previously reported, citing news sources, that the Trump administration intends to further reduce Iran's oil exports by about 20% after the exemption ends, bringing the total below one million barrels per day. Venezuela's oil production is also sharply declining, and according to OPEC's report, Venezuela's oil production in February reached about one million barrels, a decrease of more than 140,000 barrels from the previous month. This country's production was about 2.7 million barrels in 2013, but due to lack of investment and economic crisis, it has continuously fallen over the past few years. However, Khalid al-Falih, the Saudi oil minister, pointed out that 'the global market is currently facing an oil surplus, and it seems that surplus production will continue until the end of the year,' stating, 'As long as stored oil reserves in the world increase, we are moving away from our main goal of achieving balance in the market.' The Trump administration has repeatedly urged OPEC to end oil production cuts and prevent prices from rising. However, Khalid al-Falih stated that OPEC is under pressure not from the U.S. but solely from the market, and its only goal is to create balance in global oil markets. According to Reuters, the Saudi oil minister's remarks seem aimed at persuading the U.S. to further reduce Iranian oil exports. On one hand, the International Energy Agency recently announced that global markets will face a 'daily shortfall of half a million barrels of oil' in the coming months (the second quarter of 2019). On the other hand, according to global statistics, Saudi Arabia has reduced oil production by 170,000 barrels more than its commitment. According to estimates by the International Energy Agency, OPEC member countries, excluding Iran and Venezuela, currently have the capacity to increase their production by 2.8 million barrels per day, two-thirds of which is held by Saudi Arabia.