Iran is accusing the organization of petroleum exporting countries (OPEC) and its allies of improperly redistributing crude oil production quotas, as United States’ sanctions against the crude oil producer takes effect.
Bijan Zanganeh, Iranian oil minister in a letter to Suhail al-Mazrouei, UAE energy minister and OPEC president said that the OPEC and non-OPEC committee overseeing the compliance agreement was not meant to allow members to produce above their individual quotas, as it was only charged with assessing member compliance with the agreement.
According to the country’s oil ministry news service, Zanganeh wrote that “to our dismay we witnessed that some members attempted to redistribute over-conformity in production adjustment level among themselves, and attempts to hand over OPEC countries’ over-conformity to non-OPEC countries.”
“This very procedure is totally in contradiction with the monitoring task of both JMMC and JTC, and indicates misinterpretation by the JMMC over its mandate, as well as disregard for the decision of the 174th Meeting of the OPEC Conference,” he continued.
In June, OPEC and its allies led by Russia had agreed to raise production by about 1 million barrels per day by reducing over compliance with production cuts that had been in force since January 2017, but the cartel has left unsettled how those barrels will be shared.
On one hand, several members are unable to raise production; Venezuela is in the throes of an economic crisis, while Iran faces the snap back of US sanctions in November. Saudi Arabia and its Gulf allies, along with Russia, on the other hand, have been tapping into their spare capacity, which makes up the bulk of the increase.
Should the committee persist in its efforts, Zanganeh said he would request an extraordinary OPEC meeting to resolve the conflict.
Mazrouei had no immediate comment on the letter, UAE officials said.
Equities March 24, 2020