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Iran’s Oil Minister Bijan Zanganeh will attend the September meeting of the Joint Ministerial Monitoring Committee of OPEC and Russia and will probably press his OPEC partners to preserve original member production quotas, S&P Global Platts reports, quoting an Iranian oil ministry official.
The JMMC was formed when the cartel and Russia agreed to reduce oil production to boost international prices to keep an eye on compliance, but the committee is still in place after in June the partners agreed to start pumping more to keep a lid on prices. This, however, led to a suggestion by Saudi Oil Minister Khalid al-Falih that production quotas should be reallocated among OPEC members, since some could not pump more than they did at the time.
This suggestion prompted a heated response from Tehran and no wonder: with more U.S. sanctions on the way, Iran would certainly feel a squeeze in its oil production. If other OPEC members have their hands tied by their original quotas, there will be reverberations from the Iran sanctions across global oil markets, and this could give Iran some leverage against the U.S. If, however, OPEC members are allowed to pump more than their original quotas allow, then the effect of the sanctions could be absorbed, albeit partially.
The JMMC includes Al-Falih, Russia’s Alexander Novak and the oil ministers of Kuwait, Venezuela, Algeria, and Oman. Of all these, Venezuela has the most interest in supporting Iran, which is not a member of the committee, as it is dealing with its own production slump resulting not least from severe U.S. sanctions. Support from Venezuela, however, is unlikely to be enough for Zanganeh to make OPEC reject the Saudi minister’s proposal.
So far, Zanganeh has expressed Tehran’s displeasure with OPEC’s latest moves in letters, the latest of which, addressed to the 2018 President of the cartel, UAE’s Suhail al-Mazrouei, said Zangahen will call an extraordinary meeting of OPEC. The minister added that he would resort to this move if the JMMC does not stop trying to make “any attempts to redistribute the over-conformity, including, among OPEC member countries, or, between OPEC and non-OPEC countries, as this is beyond the mandate of JMMC and it contradicts the decision made at the 171st Meeting of the OPEC Conference."
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.