OPEC likely to reject Iran request for discussion of sanctions

Tehran slams US for for seeking Saudi oil output hike

DUBAI, June 9, (RTRS): OPEC is likely to reject a request by Iran to discuss US sanctions against Tehran at this month’s meeting of the oil producer group, a source familiar with the matter told Reuters.

Iran’s OPEC governor Hossein Kazempour Ardebili asked the chairman of the OPEC board to include a sanctions debate in the agenda for the June 22 talks, according to a copy of Kazempour’s letter dated June 2 and seen by Reuters.

Last month, Iranian oil minister Bijan Zanganeh asked OPEC to support it against new US sanctions and signalled Tehran disagreed with Saudi Arabia’s views on the possible need to increase global oil supplies.

“I would like to ... seek OPEC’s support in accordance with Article 2 of the OPEC Statute, which emphasises safeguarding the interests of member countries individually and collectively,” Zanganeh wrote last month in a letter to his United Arab Emirates counterpart, who holds the OPEC presidency in 2018.

US President Donald Trump last month pulled out of an international nuclear deal with Iran, announcing the “highest level” of sanctions against the OPEC member. Iran is the third-largest oil producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia and Iraq.

Oil ministers from OPEC will be meeting at the group’s Vienna headquarters to discuss output policy.

Kazempour, citing Zanganeh’s letter, asked the board to include in the June talks an agenda item titled “OPEC Ministerial Conference support to the Member Countries that are under illegal, unilateral and extraterritorial sanctions”.

The source said that after receiving Kazempour’s request, the UAE’s OPEC governor Ahmed al-Kaabi sought the advice of legal counsel.

The counsel responded negatively to Iran’s plea, the source said, on the grounds that the ministerial agenda could not be amended because it had been finalised.

Meanwhile, Iran said on Friday a US request for Saudi Arabia to pump more oil so that it could cover a drop in Iranian exports was “crazy and astonishing” and said OPEC would not heed the appeal, setting the stage for a tough OPEC meeting this month.

Challenges

Iran, Saudi Arabia’s arch-rival, has a history of raising challenges in OPEC meetings. In 2015, Tehran refused to sign up to OPEC policies, saying it needed to hike output due to the easing of sanctions after a nuclear accord with world powers.

US President Donald Trump pulled out of that nuclear deal last month and announced the “highest level” of sanctions against Iran, the biggest producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia and Iraq.

“It’s crazy and astonishing to see instruction coming from Washington to Saudi to act and replace a shortfall of Iran’s export due to their Illegal sanction on Iran and Venezuela,” Iran’s OPEC governor Hossein Kazempour Ardebili told Reuters.

The EU is not planning to join sanctions this time and has called on the United States to give its companies waivers so they can continue doing business with Tehran.

But many European companies are already severing ties with Tehran for fear of facing secondary sanctions from the United States, which could mean losing access to the US dollar clearing system.

The US sanctions on Iran’s petroleum industry will take effect after a 180-day “wind-down period” ending on Nov. 4 but many European refiners are already winding down Iranian oil purchases.

Iran has called on OPEC to discuss what it called “illegal” sanctions at the next meeting on June 22, which is due to debate production policies.

OPEC and its allies led by Russia have cut a combined 1.8 million barrels per day of output since January 2017 and the cuts are due to expire at the end of 2018.

However, Saudi Arabia and Russia have said cuts could be eased after receiving calls from consumers including the United States, China and India to support global demand.

Iran’s Kazempour predicted OPEC would not heed the US request and said oil prices would jump in response to Washington’s sanctions on Iran and Venezuela, as they did during a previous round of US sanctions against Iran.

“No one in OPEC will act against two of its founder members,” he said. “The US tried it last time against Iran, but oil prices got to $140 a barrel.”

OPEC, founded in 1960, has a history of collaboration over oil policy despite differences of opinion and even wars between some members over the years.