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Iran has asked fellow OPEC members to “refrain from any unilateral measures”, warning that would undermine the unity of OPEC, following reports that Saudi Arabia has raised its oil production to a record high this month.
As Tehran seeks ways to counter U.S. sanctions that would restrict its exports and eat into its market share, Iranian Oil Minister Bijan Zanganeh wrote to his UAE counterpart, Suhail al-Mazrouei, who holds the OPEC presidency in 2018, urging him to remind OPEC members to adhere to last month’s agreement.
“Any increase in the production by any member country beyond commitments stipulated in OPEC’s decisions … would constitute breach of the agreement,” Zanganeh wrote in the letter seen by Reuters and reported by Iranian state media.
“I hereby request your excellency to remind OPEC member countries to adhere to their commitments… refrain from any unilateral measures undermining the unity and independence of the OPEC,” he added.
OPEC agreed with Russia and other oil-producing allies on June 23 to raise output from July, with Saudi Arabia pledging a “measurable” supply boost, but giving no specific numbers.
OPEC and non-OPEC countries said they would raise supply by returning to 100 percent compliance with previously agreed output cuts, after months of underproduction. That would be roughly 1 million barrels per day of crude oil output increase according to OPEC officials.
But since then sources familiar with Saudi oil thinking have briefed the market about an imminent rise in Saudi output to a record. Last week, a source told Reuters that Saudi output would rise to 11 million bpd in July, a whole 1 million bpd above May.
Iran had been pushing hard for oil producers to hold output steady as U.S. sanctions are expected to hit its exports.
But Saudi Arabia, OPEC’s biggest producer, was keen to raise output to meet calls from President Donald Trump and major consumers such as India and China to help cool oil prices and avoid shortages, according to Saudi officials including Energy Minister Khalid al-Falih.
Non-OPEC Russia, meanwhile, was under pressure from its own energy companies to lift caps on output and fight a steep rise in domestic fuel prices that was hurting President Vladimir Putin’s popularity, Russian sources have said.
In the end, Saudi Arabia and Russia pushed through a rise of about 1 million bpd at the Vienna meeting.
Washington said last week it was asking customers in Asia and Europe to reduce Iranian oil purchases to zero from November, and that it will not grant any waivers to sanctions.
In his letter, Zanganeh said that unilateral decisions by some OPEC members were weakening the exporting group and that OPEC should not let others take political measures against the group’s unity and independence.
“Any unilateral production increase beyond member countries’ commitments under the OPEC’s decisions would prompt U.S. to take actions against Iran,” he wrote.
“OPEC decisions by no means warrant any action by some of its member countries in pursuit of the call for production increase by the U.S., politically motivated against Iran and publicly declared.”