Iran accuses OPEC of manipulating crude oil output quotas

The six-country OPEC/non-OPEC committee overseeing the agreement improperly attempted to redistribute crude oil production quotas at its July 18 meeting in Vienna, Iranian oil minister Bijan Zanganeh wrote to UAE energy minister and OPEC President Suhail al-Mazrouei on Wednesday.

Should the committee persist in its efforts, Zanganeh said he would request an extraordinary OPEC meeting to resolve the conflict. The committee, called the Joint Ministerial Monitoring Committee, and its subsidiary Joint Technical Committee are only charged with assessing member compliance with the agreement, Zanganeh wrote in a letter posted online by Iran’s oil ministry news service Shana.

Iran, which has steadfastly maintained that the deal does not allow members to produce above their individual quotas, attended the committee meeting as a non-voting observer.

“To our dismay we witnessed that some members attempted to redistribute over-conformity in production adjustment level among themselves, and attempts to hand over OPEC countries’ over-conformity to non-OPEC countries,” Zanganeh wrote. “This very procedure is totally in contradiction with the monitoring task of both JMMC and JTC, and indicates misinterpretation by the JMMC over its mandate, as well as disregard for the decision of the 174th Meeting of the OPEC Conference.”

Mazrouei had no immediate comment on the letter, UAE officials said. OPEC and 10 non-OPEC allies led by Russia agreed on June 23 to raise production by about 1 million b/d by reducing overcompliance with production cuts that had been in force since January 2017. But the coalition has left unsettled how those barrels will be divvied up.

Several members are unable to raise production; Venezuela is in the throes of an economic crisis, while Iran faces the snap back of US sanctions in November. That leaves primarily Saudi Arabia and its Gulf allies, along with Russia, to account for the bulk of the increase by tapping into their spare capacity.

Iran has said that the deal still maintains individual quotas, while Saudi Arabia and Russia have said the deal has morphed into a collective supply ceiling.

Saudi far above quota: Saudi Arabia pumped 10.63 million b/d in July, according to the latest S&P Global Platts OPEC survey, far above its quota of 10.06 million b/d, though kingdom officials say their July output was 10.29 million b/d. Russia produced 11.22 million b/d in July, according to official data, basically erasing its 300,000 b/d pledged cut.

Saudi energy minister Khalid al-Falih chairs the JMMC, while Russian counterpart Alexander Novak is the alternate chair. The JMMC next meets via teleconference on August 22 and then in person September 22-23 in Algiers. Zanganeh asked Mazrouei to ensure that the JMMC refrains “from making any attempts to redistribute the over-conformity, including, among OPEC member countries, or, between OPEC and non-OPEC countries, as this is beyond the mandate of JMMC and it contradicts the decision made at the 171st Meeting of the OPEC Conference.”

He added: “In case the JMMC does not fulfill its mandate as stipulated in the decision of the 174th Meeting of the OPEC Conference and has a different understanding from the decision of the above-mentioned conference, the issue should be raised at an extraordinary meeting of the OPEC Conference for decision making.” Platts