Iran’s representative to OPEC, Kazem Gharibabadi, has said no member of OPEC should produce more than its quota and take over another member’s shares on the market.
Gharibabadi’s statement comes on the heels of announcements by U.S. ally Saudi Arabia and Russia that they will increase production to insure a secure supply ahead of the reimposition of U.S. sanctions on Iranian oil.
The 24-member OPEC and non-OPEC producers agreed to cut oil production by 1.8 million barrels per day (mb/d) in January 2017 to push oil price higher, but during the ministerial meeting on June 23, OPEC member and non-members agreed to ease the production cut because the actual oil supply had dipped to 2.8 mb/d.
Iran says only those countries that produce below their quota should be allowed to raise output levels.
Referring to the U.S. withdrawal from the nuclear deal with Iran in May 2018 and resuming “unilateral, illegal, and unjust sanctions,” Gharibabadi said that OPEC should unify and support its members to prevent the politicizing of the group.
Despite Iran’s interpretation, the Joint Ministerial Monitoring Committee (JMMC), which is monitoring the production cut, approved the increased production by some members July 18.
Last month OPEC’s overall production again increased by 40,700 b/d. Russia also raised production to 11.2mn b/d in July, 250,000 b/d more than its quota.
What is behind Iran’s objection?
As global demand for oil remains lackluster and the production capacity of some countries outpaces Iran’s, Iranian leaders are worried about losing their market share amid renewed U.S. sanctions.
According to OPEC’s latest figures, Iran’s oil production declined by more than 85,000 b/d in June and July after the U.S. pulled out of the nuclear deal.
The U.S. will re-impose oil-related sanctions on Iran in November and the country’s oil exports are expected to halve to about 1 mb/d as a result.
Iran’s regional rival Saudi Arabia claims it has 1.5 mb/d of untapped production capacity, while the U.S. itself plans to increase output by 1 mb/d next year.
According to OPEC figures, the production level of non-OPEC producers is expected to grow 2.13 mb/d in 2019, while the global demand is estimated to increase only by 1.64 mb/d.