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Page added on June 17, 2018
Iran Says Three OPEC Members to Veto Saudi-Proposed Supply Boost
Iran says Venezuela and Iraq will join it in blocking a proposal to increase oil production that’s backed by Saudi Arabia and Russia when OPEC and its allies meet in Vienna this week.
“Three OPEC founders are going to stop it,” Iran’s representative to the bloc Hossein Kazempour Ardebili said in comments to Bloomberg on Sunday. “If the Kingdom of Saudi Arabia and Russia want to increase production, this requires unanimity. If the two want to act alone, that’s a breach of the cooperation agreement.”
Iran’s comments show that OPEC members are set to clash when they meet later this week in Vienna to discuss the proposal to end global output cuts. The historic 24-nation pact has succeeded in its goals of balancing oil markets and lifting crude prices, and the two biggest producers want a relaxation of quotas as soon as next month. But while Saudi Arabia and Russia are pumping below capacity, many countries in OPEC including Iran and Venezuela would struggle to raise output even if their quotas were increased.
OPEC and its allies could consider a production increase of as much as 1.5 million barrels a day, Russian Energy Minister Alexander Novak said on Thursday. That would be enough to offset the supply losses from Venezuela and Iran foreseen by the International Energy Agency. Saudi Arabia has been discussing different scenarios that would raise production by between 500,000 and 1 million barrels a day, according to people familiar with the matter.
Trump Pressure
Alexander Novak
The alliance is also facing pressure from outside. U.S. President Donald Trump has continued to criticize the Organization of Petroleum Exporting Countries on his Twitter account. Worried about the impact of gasoline prices on mid-term elections, the Trump administration is lobbying hard for a surge in production.
“We call upon our brothers in OPEC and Russia that we do not need to appease Trump, who sanctions two OPEC founders and also Russia,” Kazempour Ardebili said. “We are sovereign nations driven by our own responsibilities and values. The whole world has to stand against these arrogant attitudes — and will.”
U.S. sanctions will contribute to Iran and Venezuela potentially losing almost 30 percent of their oil output next year, requiring extra supplies from the group’s Gulf members, the International Energy Agency said last week.
“No changes took place in market fundamentals, although” the U.S. Energy Information Administration and IEA “rushed to say differently,” Kazempour Ardebili said.
“The market is well-supplied, and OPEC should abide by its decision up to the end of the year,” he said. “I am confident many other OPEC members feel and act the same.”
9 Comments on "Iran Says Three OPEC Members to Veto Saudi-Proposed Supply Boost"
DMyers on Sun, 17th Jun 2018 7:13 pm
Com’n guys, give it the gun. Bring back the glut. We need cheap gas over here, so we can buy all the other shit we love. Appease Trump. It’s okay.
JuanP on Sun, 17th Jun 2018 7:29 pm
It sounds like it will be hard to reach an agreement. Iran, Iraq, and Venezuela are being shortsighted, but it is understandable considering their situations. However, I think they are making a mistake since an oil price spike could cause a global financial crisis and bring the whole house of cards crushing down which would push oil prices down. I think Russia is going for stability at reasonable prices like we have today and that is the way to go. Saudi Arabia is motivated more by its wish to damage Iran’s economy, which is stupid, but they are still taking the best course of action (increasing production) even if they are doing it for the wrong reasons. The deal expires at the end of the year if they can’t agree to change it. In the meantime, there is nothing Iran, Iraq, and Venezuela can do against Russia, Saudi Arabia, Kuwait, and UAE if they decide to increase production on their own. I think those are the only four countries with spare production capacity at this time, but please correct me if I am wrong.
JuanP on Sun, 17th Jun 2018 9:34 pm
“India, China look to form ‘oil buyers club’
https://www.rt.com/business/430020-china-india-oil-buyers/
rockman on Sun, 17th Jun 2018 10:03 pm
Juan – Of course any vote or veto is just for public show. There is no method for verifying export volumes from any OPEC member…or Russia. Never has been. The only way to guestimate actual export volumes is to watch prices. And not very accurate given the impact of demand fluctuations.
JuanP on Mon, 18th Jun 2018 12:11 am
Not related to subject: Russian Embassy beats Uruguay at Washington DC “world cup” friendly game.
https://www.rt.com/sport/430053-russia-uruguay-dc-world-cup/
Davy on Mon, 18th Jun 2018 10:23 am
Wow, that sucks for China and Russia. They might want to avoid risky investments in the future.
“Venezuela Forced To Shut Down Production As Operations Fall Apart”
https://tinyurl.com/ybt2bjgr
“There are now signs that its oil industry is entering a dangerous new phase. Argus Media reports that Venezuela has begun to “proactively shut in oil production to cope with nearly replete terminal storage, further accelerating an output decline and bringing the OPEC country closer to the psychological barrier of 1mn b/d.”
BobInget on Mon, 18th Jun 2018 10:56 am
Agreeing with Rockman. EXCEPT… This time it may be different. (famous last words).
1)Demands from Asia have diminished KSA’s stockpiles.
2) Libya’s stockpiles diminished by explosives.
3) Off and on shore Nigerian pipelines cut.
4)Venezuela’s exports could go to zero soon.
5) Iraq experiencing ‘terrorist’ bombing weekly.
6) Iran being pushed to fill existing demand because of sanctions.
40% of US shale is in fact condensates. Refineries
require heaver crude.
Davy, Russia already owns CITGO.
https://en.wikipedia.org/wiki/Citgo
China can deal with the Next Venezuelan government. Unlike KSA, that Orinoco stash is
largely untouched for two million years. Two, three, more yrs won’t hurt. Venezuela will become like CUBA with most anti government protesters
having departed.
Investors should note. CITGO can no longer feed
its refineries w/o VZ heavy crude.
Canada has plenty of such oil.
rockman on Mon, 18th Jun 2018 12:17 pm
And finally at the end of another long story the mention a problem often left undescribed: “Meanwhile, PDVSA apparently does not have enough of the type of oil that it typically sends to Cuba, so, despite being essentially broke, it is reportedly trying to purchase light crude from third parties to send to Cuba in order not to disrupt shipments to its ally.” IOW Vn lacks the condensate/light oil needed to BLEND with its heavy oil to produce a product the refineries can handle.
This could also be part if not all the explanation of the growing storage volume: the oil being stored is not the blended oil required by the refineries. Could not find any documentation on the gravity of the oil in storage. But if it’s heavier then the 32 API required by the refineries someone will have to buy the condensate/light oil needed to blend with the Vn production. Without such blending the Vn production has very little marketability. Which is why a year or two ago Vn was buying condensate/light oil from North Africa and paying to ship half way around the world.
JuanP on Mon, 18th Jun 2018 4:41 pm
“China can substitute US oil with Iran’s crude” on RT
https://www.rt.com/business/430138-oil-prices-iran-china-us/
I hope you like this, exceptionalist, I made it pretty and easy especially for you! ROFLMFAO!