OPEC, non-OPEC unlikely to extend agreement to cut production

TEHRAN, Dec. 04 (MNA) – Iran's OPEC Governor Hossein Kazempour Ardebili says OPEC and non-OPEC partners are unlikely to extend their agreement to cut production in a bid to shore up prices.

According to Kazempour Ardebili, OPEC is seeking to strike a balance in supply and demand to help all member states make “acceptable income”.

Laying the blame on some producers for lack of commitment in the recent months, Kazempour Ardebili said, some members are trying to harm others by increasing their own production that would be like using OPEC in an “economic war”.

The senior official said that Iran “is currently suffering losses from both oil price decline and production fall resulting from sanctions”.

According to him that some other OPEC members and non-OPEC nations are also suffering losses. He added that some nations have lost around $9 billion in the past three months while some others have gained profits at around $2.7 billion.

However, noting that production hike should only come by members that have already increased output, the official said, since such nations who have benefited from production hike are unlikely to cut their output by 1.4 mb/d to 1.8 mb/d to bring prices back to an upward trend, I don’t think any agreement would be reached.

“Some Countries that are suggesting production cut at significant amounts are following two objectives: first, they want to claim they have cut output while some others didn’t and then shift the blame on others for future price slumps,” he said.

“On the other hand, if such production cut is agreed upon by other members, it will send a political message to the US that if you grant us waivers we will cut output,” he said, reiterating that “in other words, that is a message addressed to the US to further toughen sanctions against Iran.”

“If the Cooperation Agreement is set to change or be renewed, the production rate has to change in light of prevailing decision for members to cut output,” he added.

Kazempour Ardebili said some OPEC members have had “harmful impacts” on the market in recent months, creating a political tool against Iran.

“Therefore, the Cooperation Agreement 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 who refuses to adhere to OPEC-non-OPEC agreement it will see its position being 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 Joint OPEC-non-OPEC Ministerial Monitoring Committee (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] 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.

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, 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 are 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 will lack any spare capacity for increased production if needed. That strengthens the possibility of minor member states’ exiting from OPEC,” he said.

MNA/SHANA

News Code 140195

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