Iran rarely accuses OPEC+: there is little room left to restore oil supplies!

On Monday, Iran's representative at OPEC+ said that OPEC+ has little room to reverse its oil production cuts, and these production cuts have already triggered a supply wave in the US shale oil industry.

“This price-supporting strategy has actually encouraged countries outside the group to increase supply,” Iran's OPEC director Afshin Javan (Afshin Javan) said in an article published in the official Shana news agency. “This leaves limited room for OPEC+ to ease production restrictions,” he said.

This post is an unusual critique of the group's policies by one of OPEC's founding members. In a few days, OPEC+ will meet to discuss plans to resume production cuts. Jaffan also wrote that some smaller African member states, including Gabon and the Congo, may leave the group because they are unable to pay membership fees.

OPEC+ is a coalition of OPEC countries such as Saudi Arabia and non-member states led by Russia. They are seeking to resume production cuts since 2022, but have been forced to postpone plans to increase production due to falling crude oil prices.

Jaffan warned that OPEC+'s planned increase in production “could result in an oversupply in 2025.”

He wrote that the coalition's production cuts over the past four years have fueled a sharp rise in US shale oil production. Since 2020, US shale oil production has climbed 2 million barrels per day.

Jia Wen added that the “bleak demand outlook” in the biggest consumer of crude oil further complicates the challenges faced by OPEC+.

“Demand for OPEC crude oil is likely to drop this year,” he wrote. His assessment is in stark contrast to the predictions of OPEC's Vienna-based research department, which anticipates growing demand for the group's production.

Iran's oil minister Mohsen Paknejad (Mohsen Paknejad) said on the same day that Iran will try not to accept restrictions on oil production quotas.

According to representatives, OPEC+ plans to hold an online meeting this weekend instead of the face-to-face meeting originally planned.

This is the third time in a row that the coalition has turned a meeting originally scheduled to be held at its Vienna headquarters into an online meeting. Delegates, who asked not to be named, gave no reason to change the format of the December 1 meeting. And people anticipated this transformation as early as a few days ago.

Major OPEC+ members need to decide at the meeting whether to continue with plans to gradually resume stopped oil production, which they have already postponed twice. These countries were supposed to resume production of 2.2 million barrels per month starting in January, but due to low oil prices, this plan was delayed from October.

Since the beginning of July, due to weak Chinese demand and expanding US supply, Brent crude oil futures have fallen 15%, falling below $75 per barrel. Such prices cannot meet government spending in Saudi Arabia and many other OPEC member countries. The International Monetary Fund estimates that Saudi Arabia would need oil prices close to $100 per barrel to meet its ambitious transformation plans.

A Bloomberg survey last week showed that traders and analysts questioned OPEC+'s performance in increasing production as scheduled next year. Citigroup and J.P. Morgan Chase predict that the upcoming oversupply will be enough to push oil prices to $60 per barrel. They warned that oil prices could drop further if the group “turns on the tap.”

Since the Russian-Ukrainian conflict broke out in early 2022, OPEC+, which consists of 23 countries, has only held two meetings in Vienna. This incident has damaged Moscow's political relations with the European Union and other countries. Since the COVID-19 pandemic, most of the group's meetings have been online.

At the last OPEC+ meeting in June, Saudi Arabia invited seven other member states currently involved in production cuts to rally at the Ritz Hotel in Riyadh until the last minute.