In recent months, it’s been difficult to hear any positive statements coming from Iran’s troubled oil sector, particularly since President Trump decided in May to reinstate tough sanctions over what he sees as Iran’s non-compliance with the 2015 nuclear accord it reached with the U.S. and other western powers.
However, Iranian Oil Minister Bijan Zanganeh praised OPEC on Saturday over what he claimed was the oil-producing cartel's ability to reach an oil output agreement despite intense internal political differences. On December 7, the so-called OPEC+ group of producers, which includes production heavyweights Saudi Arabia and non-OPEC member Russia, agreed to trim production by 1.2 million b/p for six months, starting in January, with the deal to be revisited in April.
The move is intended to drain down global oil markets amid supply worries as the U.S., Saudi Arabia and Russia, the world’s top three oil producers, pump at record levels. It also comes as oil demand growth concerns persist amid ongoing trade tensions between the U.S. and China. “OPEC ... has shown the capacity in which members can hold talks and reach important results regarding their common interests despite having the most intense political disputes or even military conflicts (such as during the Iran-Iraq war),” Zanganeh said on his Twitter account.
Iran’s positive spin
This is the first positive spin that Iran's media-savvy oil minister has put on OPEC developments in months. Though OPEC+ reached a deal on December 7, including waiving Iran from having to cut output given its problems with fresh sanctions, the upbeat tone simply won’t last.
Vying for regional dominance
Both Iran (OPEC’s third largest producer) and Saudi Arabia (OPEC’s largest producer and de facto leader) are vying for geopolitical hegemony in the Middle East, mostly through proxy wars in Yemen and Syria. The two countries also have differing opinions on how OPEC should conduct itself as a unit, how it should respond to President Trump’s seemingly constant Tweets calling for high OPEC output to keep a lid on oil prices, and more poignantly, how the cartel should work with Russia and other non-OPEC oil production partners. Related: These Countries Found The Most Oil In 2018
Saudi Arabia and Iran are also at odds over Tehran's ballistic missile development plans as well as the Islamic Republic’s controversial nuclear development program, an issue that will continue to fester as U.S. sanctions eat into Iranian economic growth, causing massive unemployment to spike and a continuing downward trajectory of its currency.
Iran’s renewed threats
Case in point, last Thursday, Ali Akbar Salehi, head of the Atomic Energy Organization of Iran (AEOI), warned that Iran has the capability to restore 20-percent uranium enrichment if the 2015 nuclear deal is discarded by parties still remaining under the agreement. “Enrichment is currently underway, but we would put aside the 300kg limit (set by the nuclear agreement) whenever we wish and would do the enrichment at any volume and level,” he said in an interview with state TV on the sidelines of a visit to the Fordo nuclear facility. “We currently have 1,044 centrifuges in Fordo, and if the establishment wants, we will restart 20-percent uranium enrichment in Fordo,” he added.
UK and France voice concern
His comments come just a week after France and the UK, both signatories of the 2015 nuclear accord, warned Tehran that it may be in breach of United Nations obligations by testing medium-range ballistic missiles capable of carrying multiple warheads. UK foreign secretary, Jeremy Hunt, said in a statement he was “deeply concerned by Iran’s test firing of a medium-range ballistic missile. Provocative, threatening and inconsistent with UNSCR 2231. Our support for JCPOA in no way lessens our concern at Iran’s destabilizing missile programme and determination that it should cease.”
French President Emmanuel Macron’s office issued a similar statement, saying it was deeply concerned and the tests were “provocative and destabilising”. It urged Iran to stop all testing of ballistic missiles capable of carrying nuclear warheads.
By Tim Daiss for Oilprice.com
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