Iran Exempted From Output Cut
Zangeneh Emerges Winner in OPEC Oil War
Iran once again proved its influential standing within the Organization of the Organization of the Petroleum Exporting Countries (OPEC). The OPEC 175th ministerial meeting was held on December 6-7 amid expectations for the oil producer group to reduce output in order to shore up prices.
Saudi Arabia insisted that all member states had to reduce their production without any exception.
However, Iran’s petroleum minister, Bijan Zangeneh, said from the very beginning that Iran had to be excluded from any production decline, as the country is under US unilateral oil embargo.
In the end, OPEC agreed to reduce its output by 800,000 b/d as of next year. Iran, Venezuela and Libya were exempted from the decision.
Iran’s Zangeneh was the final winner of the OPEC meeting.
Tough and Sophisticated Meeting
The 175th OPEC Conference was one of the toughest in OPEC history. On one hand, small OPEC member Qatar unveiled its decision to leave the body mainly due to some OPEC members’ submission to US President Donald Trump’s demands in recent years. Qatar said it preferred to focus on gas rather than oil.
Furthermore, on December 5 – one day before the OPEC meeting – Brian Hook, the of Iran Action Group and Senior Policy Advisor to the Secretary of State, traveled to Vienna and met with Saudi Minister of Energy Khalid al-Falih. The Saudi minister said he had “received” the US government’s plans and views about sanctions against Iran.
As soon as the US re-imposed sanctions on Iran’s oil sector in November, some OPEC members like Saudi Arabia moved to ramp up their production in a bid to keep oil prices from falling sharply, as Iran was expected to be eliminated from the market. Due to production hike by some OPEC member states, oil prices fell by about $30 a barrel. The downward trend in prices was such that the OPEC/non-OPEC Joint Ministerial Monitoring Committee (JMMC) agreed in its May meeting upon production decline. Saudi Arabia said the 175th OPEC Conference would discuss OPEC production cut, calling on fellow members to reduce their output in order to restore balance in the market.
In response, Hossein Kazempour Ardebili Iran’s governor for OPEC said: “OPEC’s objective is to strike a balance [to the market] and secure acceptable income for all member states.”
“If some members are to harm others with their production that would be like using OPEC in an economic war” he added.