Oil Minister Bijan Namdar Zanganeh said the agreement that the Organization of Petroleum Exporting Countries and allied producers reached in 2016 to cut output is in tatters, and an OPEC committee set to meet this weekend in Algiers has no authority to impose a new supply arrangement, Bloomberg reported.
“I will block any OPEC decision that poses the slightest threat to Iran,” Zanganeh said.
Any decision on a new production agreement by OPEC’s Joint Ministerial Monitoring Committee that meets on Sunday would be “void” and “invalid,” he said. “Decisions can only be made at OPEC meetings in the presence of all OPEC members and by consensus of members.”
The US has intensified pressure on Iran after its withdrawal from the 2015 nuclear agreement. It has reimposed nuclear-related sanctions on Iran. The sanctions on Iran’s oil sales take effect on Nov. 4, and the US President Donald Trump has vowed to curb exports from OPEC’s third-biggest producer to zero.
The move has pushed oil prices to levels not seen since late 2014.
“I think Mr. Trump made this decision to bring Iran’s exports to zero without any consultation with any experts, not even in his own government,” he said. “He has realized lately that this is not doable. So, they are looking for a symbolic export of zero, if they can, even for just one month.”
Zanganeh said he won’t be attending the Algerian JMMC meeting, which is to occur just days before the two-year anniversary of OPEC’s decision to pare production and curb a glut. Russia and other suppliers agreed in December 2016 to join OPEC in trimming output. The cuts had their intended effect, and in June of this year Saudi Arabia and Russia decided to change course and boost supply to stem a price rally.
“The agreement doesn’t really exist anymore. It’s finished,” Zanganeh said. Russia initially cut 300,000 barrels a day of production but then added it all back, he said. “There’s no agreement left, really.”
The current supply-cuts deal expires automatically at the end of this year, unless producers replace it with a new one. When OPEC and its allies agreed in June to boost output, they didn’t specify country quotas. Saudi Arabia and Russia said the increase would be about one million barrels a day.
Referring to US efforts to cut down Iran’s oil exports to zero, Zanganeh took a swipe at the countries that have vowed to make up for the shortfall in the market, saying that those states are "siding with the US."
The two members are seeking to damage the group and carry out “anti-Iranian policies” at the behest of the US, Zanganeh said. He didn’t identify the countries. Saudi Arabia and the United Arab Emirates are the staunchest backers of the US within OPEC.
He said he has written letters to some OPEC and non-OPEC oil ministers expressing his concerns and has complained to the group’s secretary-general about “violations” to the original output-cuts agreement, though he wouldn’t elaborate.
Oil prices are trading near their highest in two months in London, at almost $80 a barrel, as demand concerns arising from US-China trade tensions are countered by supply losses from Iran to Venezuela.
Oil at $80 a barrel is a “suitable” price, Zanganeh said. Although Sunday’s gathering in Algiers is a committee review, rather than a full-scale official OPEC meeting, most major producers will attend.