Iran OPEC Governor:
Oil Producers Lose $9bn over Price Slump
Iran’s OPEC governor says OPEC and non-OPEC allies have suffered $9 billion in losses in recent months due to a sharp decline in oil prices.
“Although some nations increased their production to compensate for losses resulting from price decline, the number of loss-producing countries is still higher,” Hossein Kazempour Ardebili Iran's governor for OPEC said.
“The approximate loss incurred by OPEC and non-OPEC [oil producing] nations due to the oil price decline over the past three months is estimated at $9 billion. That is while the profit gained by some of these nations is about $2.7 billion,” he added. “Of course even those who made profits only gained higher net revenue, otherwise they have sold their products at low prices.”
Kazempour Ardebili said Iran “is currently suffering losses from both oil price decline and production fall resulting from US unilateral sanctions”.
“But if some members are to harm others by increasing their own production, that would be like using OPEC in an economic war,” he said.
He said that OPEC was seeking to strike a balance in supply and demand and help all member states make “acceptable income”.
More Exits Likely
He referred to Qatar’s future exit from the Organization of the Petroleum Exporting Countries, saying: “This country (Qatar), along with some other nations, are unhappy with the autocratic and uncommitted moves of the JMMC (the Joint OPEC-non-OPEC Ministerial Monitoring Committee), because they were committed to applying any change in production after informing OPEC members and winning their consensus or probably after coordination with non-OPEC members.”
Kazempour Ardebili said some other minor OPEC members were likely to follow suit.
“Some producers have limited production capacity. Therefore, they may be faced with lower demand for production, while on the other hand they lack any spare capacity for increased production if need be. That strengthens the probability of exit by minor member states. That is not impossible,” he said.
“If the "Declaration of Cooperation" is set to change or be renewed, the figure of production has to change in light of prevailing decision for members to cut output,” he added.
‘Harmful’ Impacts
Iran's governor for OPEC said some OPEC members have had “harmful impacts” on the market over recent months, creating a political tool against Iran.
“Therefore, the "Declaration of Cooperation "is unlikely to be renewed. At least, some member states will not join it, in which case any renewal will be out of the question,” he said.
“Of course, that does not mean that if Iran or any OPEC fellow member which refuses to adhere to OPEC-non-OPEC agreement, will see its OPEC standing be harmed. Rather, it can pull out of any such cooperation in protest to a behavior which had sharply decreased oil prices,” said Kazempour Ardebili.
“However, this trend (output hike) continued due to political and economic motivations and for the purpose of gaining a bigger share of market,” he said.
He added that the JMMC agreed to production hike by some nations that had spare capacity “in a self-styled attempt to make up for void left by the possible impact of [US] unilateral sanctions on Iran”.
He said that the production hike by these countries elicited objection from some other countries as they “violated OPEC’s previous resolutions”.
“[US President] Donald Trump granted sanctions waivers to some buyers of Iran’s oil, thereby creating an opportunity for Iran to continue its oil supply. Therefore, no sharp decline occurred in the market. That coincided with a significant increase by some OPEC members (in the run-up to the Iran oil embargo) and therefore oil stocks increased while prices have fallen on average by $30 a barrel over the past three months,” he said.