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Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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Iran’s Warning To OPEC: No One Can Overtake Our Oil Quota

Bijan Zanganeh Iran

“No country can overtake the production and export quotas of other member states under any circumstances,” Iran’s permanent envoy to OPEC, Kazem Gharibabadi, said this weekend, reiterating a message Iran’s Oil Minister Bijan Zanganeh sent last week to the cartel after Saudi Arabia proposed that production quotas among OPEC members are adjusted in such a way as to make sure producers with bigger spare capacity make up for those who cannot increase their production.

"Iran believes that OPEC should support its members firmly under the current conditions and prevent other countries that are seeking to politicize the organization," Gharibabadi also said at a meeting with OPEC’s secretary-general Mohammed Barkindo in Vienna. The envoy added that “the technical conditions” of other OPEC members did not suggest they would even be able to ramp up their production and exports to compensate for a supply cut from Iran.

Saudi Arabia made its suggestion for the redistribution of quotas at the June 22 OPEC+ meeting when the cartel and its partner Russia decided to reverse the 2016 production cut agreement and add 1 million barrels daily to global supply to put a cap on the price rise. However, Iran, along with Venezuela and some smaller OPEC producers, have found it challenging to boost production in the face of sanctions.

The issue is important for Tehran because if it gains enough backing for keeping quotas as they are, it would be in a stronger position as it locks horns with the United States, which has been aggressively pursuing sanctions with the knowledge that the supply shortage that will result from them will be offset by other producers.

If this does not happen, prices at the pump in the United States will remain high and maybe climb even higher, which is not something the Republican administration wants to happen with midterm elections around the corner.

By Irina Slav for Oilprice.com

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  • Mamdouh G Salameh on August 20 2018 said:
    Iran has been allocated by OPEC a production quota of 4 million barrels a day (mbd) before 2000. But since then, Iran has never been able to fulfil its quota. The maximum production it has achieved was 3.75 mbd recently, a quarter of a million barrels short of its quota.

    Iran’s oil minister Bijan Zanganeh was of course referring to Saudi Arabia’s suggestion made at the June 22 OPEC+ when OPEC and its partner Russia decided to reverse the 2016 production cut agreement and add 1 mbd to global supply to put a cap on the price rise. However, Iran along with Venezuela and some smaller OPEC producers, have found it challenging to boost production meaning in effect that their shares would go to members who can boost production, namely Saudi Arabia, UAE and Kuwait.

    The answer is for Iran to try to raise its production above 4 mbd and challenge the OPEC quota system as Saudi Arabia has done regularly rather than give warnings that “No country can overtake the production and export quotas of other member states under any circumstances”. Nothing speaks louder than action.

    Dr Mamdouh G Salameh
    Intwrnational Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Gordon Jeffrey Giles on August 23 2018 said:
    "Iran believes that OPEC should support its members firmly under the current conditions and prevent other countries that are seeking to politicize the organization,"

    That's pretty rich coming from someone who represents a country that politicizes every reaction it ever has had to any world incident by inciting hatred against Israel and the U.S.

    And as a member of OPEC, an organization whose very birth heralded an economic retribution where no political threat had any meaning... to protest the defeat of the Arab alliance against Israel in the Yom Kippur War.

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