The 10th gathering of the Joint Ministerial Monitoring Committee (JMMC) of OPEC and non-OPEC members on Sunday ended, as Iran insisted, without any direct decision on additional supply boost.
The committee finally stood by their June decision for maintaining the 100 percent compliance levels declaring that the market is balanced enough and no more production is needed at the moment.
Although the JMMC’s decision implies that the countries with spare capacity will be able to offset Iran’s future shortfalls but it could also be interpreted as a negative response to the U.S. pressures for “Zero Iranian oil”.
Now the question is what this decision means for the evolving parties and how it projects on the OPEC, non-OPEC nations and their oil policies in the future.
OPEC and expectations
In the weeks prior to the meeting, Iranian Oil Minister Bijan Namdar Zanganeh had repeatedly blamed Saudi Arabia and Russia for their soft stances against Trump requests saying that “they are turning OPEC into a political organization”.
The U.S. president Donald Trump, on the other hand, added to the pressures on his OPEC allies to take actions for reducing the oil prices [and in fact for replacing Iranian oil more hastily].
“We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” Trump wrote on Twitter.
Anticipating obedience from the allies’ side, Iran further slammed OPEC for being a “tool” for U.S. and Iranian oil minister refused to attend the JMMC’s meeting on Sunday showing his dissatisfaction with OPEC and Russia’s overtolerance in dealing with the U.S. interferences in the oil market. He even went further, declaring that “would strictly block any decision against Iran’s interests”, though he didn’t explain how.
The outcomes of the Sunday meeting, however, were quite surprising for many, including Iranian officials and experts who clearly believed this meeting was prearranged for dividing Iran’s market share.
Behrouz Namdari, a senior energy analyst told ILNA before the meeting that Saudi Arabia and Russia had already made their plans for replacing Iran’s oil and they will just discuss the details of each member’s share in the Sunday meeting, whether Zanganeh attends it or not.
A strong OPEC or an OPEC+
In recent months, the cartel was greatly criticized by many officials and experts for its weak performance, and many even questioned the necessity of its existence in the future.
Although, some of these criticism was the result of the organization’s actual weak performances but they were mostly derived from efforts for discrediting the cartel in favor of others’ political and economic interests.
As Behrouz Namdari correctly put it “If there is no coherent organization, there won’t be any obligations for restricting radical actions from oil producing countries like Russia or even U.S., so they are trying to replace OPEC with another organization called OPEC Plus, which has more market share and less power.”
So, this time the organization [or safe to say Saudi Arabia] needed to show the “other side” that OPEC still has its power and despite some obedience, it is not going to fully play by the rules dictated.
Russia, however, playing for both sides, didn’t have anything to lose whatever the results of the meeting were. In case of a decision for a boost, they would get their share and otherwise they would still have their alliance with both Iran and Saudis! Let alone their tendency to establish a new organization in which Russia would have the upper hand still stays a strong contributing factor to all their recent actions.
On the other hand, members with spare capacity also left the Sunday meeting satisfied, no production boost still means a tighter market and consequently higher prices for them
Iran supporting the “strong” OPEC
All the turmoil aside, Iran immediately voiced it’s satisfaction with the outcomes of the Algeria meeting.
Zanganeh praised the Sunday meeting’s outcome as a “negative” response to U.S. demands saying that the “U.S. dream” to cut Iranian oil exports to zero would not come true.
“The U.S. seeks to reduce Iranian oil exports to zero even for a month, but that dream would not come to reality,” ISNA quoted Zanganeh as saying on Monday.
So apparently after OPEC’s grand gesture toward the U.S. [despite its reasons], Iran is willing to stick by a strong OPEC which defies U.S., even at the expense of its market shares.
“If there is a fall not only from Iran, but anybody else, it is the responsibility of OPEC and non-OPEC to balance the market,” Reuters quoted Hossein Kazempour Ardebili, who represents Iran on OPEC’s board of governors as saying on Sunday.
First published in our partner Tehran Times