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Counties intending to make up oil market shortfall are 'speaking against Iran': Zanganeh

  • Author
  • Aresu Eqbali    Herman Wang
  • Editor
  • Wendy Wells
  • Commodity
  • Oil
  • Topic
  • US Sanctions on Iran

Tehran — Iranian oil minister Bijan Zanganeh on Thursday said he would veto any OPEC deal that imperils Tehran's oil market share, complicating the organization's talks with Russia and other partners to institutionalize their supply management accord beyond this year.

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The minister, who announced Tuesday that he would not be attending this weekend's OPEC/non-OPEC monitoring committee meeting in Algiers, criticized members of the bloc for saying they intend to boost production to offset barrels shut in by US sanctions on Iran.

OPEC agreements require a unanimous vote by the 15-country membership, according to its charter.

"I will definitely veto any decision that threatens our national interest," Zanganeh said in an interview in his office with reporters from S&P Global Platts and Bloomberg News. "Anyone who says they will compensate for the shortfall in the market is speaking against Iran. This is a 100% political statement, not economic."

OPEC, Russia and nine other non-OPEC partners on June 23 agreed to raise their collective production by 1 million b/d but have left unsettled how they will distribute the extra barrels.

Sunday's Algiers summit -- the first formal meeting of the monitoring committee since the agreement -- is intended to address the issue, and OPEC sources have told Platts that the proceedings will expand to include more than 20 ministers from the coalition.

The group also aims to formalize their market management partnership, which expires at year end.

"They are sacrificing OPEC, they are destroying OPEC and slowly, slowly, without directly saying so, they want to gather some names together to create a forum to replace OPEC and manage the market," Zanganeh said.

The minister, who has adamantly maintained that OPEC members should stick to output quotas implemented in January 2017, admitted Iran was powerless to stop any country from overproducing. But he said members who overproduce should admit to US pressure.

"If they want to produce excessively, we cannot stop them," the minister said. "There is no forcible instrument in OPEC. But they shouldn't do it in the name of OPEC. They should come out and say, 'The US has phoned and told me to increase output. And I have no other way but to do so.'"

US Donald Trump has pressed OPEC -- Saudi Arabia in particular -- to pump more oil to keep prices from rising ahead of the US midterm elections November 6.

The kingdom, which is already pumping more than 400,000 b/d above what it produced in May, has said it will use its spare production capacity to keep the market well-supplied, as needed.

Saudi energy minister Khalid al-Falih and Russian counterpart Alexander Novak said Sunday after they met in Moscow that they remained committed to "ensuring the adequacy of oil supplies, especially considering market uncertainties on the horizon."

Tehran faces the reimposition of US sanctions on its oil sales after November 4, which Platts Analytics forecasts could shut in 1.4 million b/d of Iranian crude.

Venezuela, with its crumbling economy, and Libya, with its fraught security, also present supply risks.


Zanganeh declined to reveal how much of Iran's production and exports had been impacted so far. Many buyers of Iranian crude have begun to wind down their purchases in advance of the sanctions deadline.

Nor would he reveal any strategies Iran plans to use to maintain its oil sales.

"Whatever I say, the US will take advantage of it against us. It is like 'anything you say may be used against you in a court of law,'" he said with a smile.

Current prices of near $80/b were "suitable," he said, but added: "Now, the higher it gets, the better it is for us. But it won't [happen]. The US and some other OPEC members won't allow it. When it goes up they will inject more into the market, in my opinion."

Zanganeh dismissed the upcoming Algiers summit as "not much important," maintaining that the six-country Joint Ministerial Monitoring Committee that is hosting the meeting "has no right to make any decisions." Iran will still send its OPEC governor Hossein Kazempour Ardebili, the No. 2 official in its OPEC delegation, to the meeting.

Any agreement would need to be brought before the full OPEC conference at its next regularly scheduled meeting December 3 in Vienna.

The JMMC is chaired by Saudi Arabia, Iran's longstanding geopolitical foe, and is tasked with assessing market conditions and providing recommendations to the entire coalition on output policy.

Zanganeh walked out of the previous JMMC meeting in Vienna, calling the proceedings a farce before a day later agreeing to the 1 million b/d supply boost. In his interview Thursday, he accused some members of OPEC, which he did not name, of politicizing the organization and bending it to the will of the US.

Legislation being considered by the US Congress that would allow the government to sue OPEC under antitrust laws -- the so-called NOPEC bill -- had also spooked members, Zanganeh said.

"You mustn't just sacrifice OPEC out of fear," he said. "OPEC is one of the third world's biggest accomplishments in my view, not just in terms of oil producers, but it's an organization that can be effective in the world's economy and it's a good, strong foundation."

-- Aresu Eqbali,

-- Herman Wang,

-- Edited by Wendy Wells,