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OPEC has asked on Monday for a timely settlement to the tensions that have flared up between the United States and Iran and Venezuela, Anadolu Agency reported on Monday, citing This Day.
Iran and Venezuela, both founding members of OPEC, are both exempt once again from the production cut extensions that the cartel announced last week, and will remain exempt for as long as they remain under sanction.
Both Iran’s and Venezuela’s production woes have contributed significantly to the cartel’s overcompliance to the group’s production cut quota, with Iran’s crude production falling from an average of 3.813 million barrels per day in 2017 to 2.370 million barrels per day in May 2019, and Venezuela’s crude production falling from 1.911 million bpd on average in 2017, to an abysmal 741,000 bpd in May 2019.
But while the two countries combined seemingly did OPEC a favor by taking more than 2.6 million barrels of crude oil per day out of the market within that time frame, the tensions in the Persian Gulf and the dire situation in Venezuela are creating a market that OPEC is finding it difficult to both predict and manage.
“For us we will welcome a resolution of the issues that are at stake between these countries and the U.S. sanctions distort markets and further complicate our efforts with non-OPEC members to maintain stability,” OPEC’s Secretary General Mohammad Sanusi Barkindo said on Monday.
Though OPEC is hoping—but not holding out for—a swift resolution to two of its founding members’ production problems, the issue is not OPEC’s main concern. OPEC called out last week climate activists as “perhaps the greatest threat to our industry going forward,” Barkindo said last Friday, taking specific aim at the “school strike movement” as well as climate campaigners.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.