In a statement made on Thursday, May 3, 2019, Iran’s Oil Minister, Bijan Zangeneh said that the Organization of the Petroleum Exporting Countries (OPEC) is likely to collapse due to some of its members going against their fellow producers (meaning Iran).
Zangeneh was referring to the actions of Saudi Arabia and the United Arab Emirates (UAR). On Thursday, the Trump administration tightened its energy sanctions against Iran and reports from the White House say that the Saudis and UAR will cooperate with the US to offset the Iranian oil supplies that will be cut.
Zangeneh told the Iranian ministry’s news agency, Shana, that Iran is a member of OPEC only for its own interests and that if certain countries of the 14 member OPEC should threaten and endanger Iran, Iran won’t hesitate to respond to them. His words were an indirect reference to the Saudis and UARs plans to cooperate with the US. Zangeneh’s statement came shortly after a meeting with OPEC Secretary General,Mohammed Barkindo, in Tehran on Thursday.
That’s when Zangeneh, in speaking to Barkindo, said that OPEC is likely to collapse because it is being threatened by unilateralism by certain countries.
Iran’s oil exports have already been cut by around 1 million barrels per day due to the US sanctions that were imposed in November 2018. Then on Thursday, the US ended granting sanction wavers to some of Iran’s biggest customers which oil industry analysts expect will cut Iran’s exports reducing them by several hundred thousand barrels a day.
There has been no explicit commitment by Saudi Arabia that it will cooperate with the US in hiking its output in oil production to makeup for the Iranian deficit. Saudi did, however, make an announcement that it would consult with producers and consumers before making its commitment to ensure a well-balanced and stable global oil market.
Iranian officials have frequently made threats before but they have not lead to any destabilizing actions. It’s just that the remarks come at a time of heightened tension.
This coming June 25-26, OPEC and some of its oil market allies as well as
Russia, which is not a member of OPEC, will meet in Vienna, Austria. At that time they will decide whether to continue their six-month deal to limit oil supply which has been in place since January.
As far as Saudi Arabia is concerned it is currently pumping out around 500,000 barrels per day below its quota, so it can raise its output and still remain within in the deal made by OPEC, Russia and other oil producing allies, to keep 1.2 million barrels per day off the market in order to prevent another price-crushing oil glut from happening like it did from 2014 to 2016.