ISSN 2330-717X

Iran’s Capacities For Revitalizing OPEC, Oil Freeze And Emerging World Order – Analysis

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By Behzad Khoshandam*

Among all international organizations set up by the developing countries, the Organization of the Petroleum Exporting Countries (OPEC) has had the most effective background with regard to protecting the collective interests of its members. However, at least during the past few decades, OPEC had failed to take a serious decision for the regulation and stabilization of global energy markets to guarantee maximum interests of its members due to soaring political difference among member states.

During the 170th extraordinary meeting of the OPEC Conference in Algiers in September 2016, historic decisions were made about returning to the organization’s quota system and reduction of the production ceiling of its member states. It seems that this agreement can lead to revitalization of OPEC and help it regain its past position in international developments through cooperation between member states and such important non-OPEC oil producers as Russia in order to restore stability to real price of oil in the market.

According to the agreement reached by OPEC members in Algiers meeting, the production ceiling of the organization has been set at about 32.4-33 million barrels of oil per day. The decision means that OPEC members will have to reduce their current output by 750,000 barrels per day. Of course, output reduction will not include Nigeria, Libya and Iran and other member states must take steps toward reducing their oil production. This historic decision is supposed to officially enter into force through a meeting of OPEC oil ministers scheduled for November 2016.

Recognition of Iran’s concerns by other important actors like Saudi Arabia was another step toward normalization of Iran’s international interactions following the achievement of the country’s nuclear deal with the P5+1 group of world powers. Iranian officials believe that the country’s effort to return to the previous production level it had at about four million barrels per day before international sanctions were imposed on Iran is one of the basic rights of the Islamic Republic.

As an effective and historical member of OPEC, Iran has been trying, at least during the past three years, to activate its energy diplomacy along the same lines. In doing this, first efforts to attract Iran’s support and cooperation by the common front of Russia and Saudi Arabia started in the failed meeting of OPEC and non-OPEC oil producing countries in Qatar’s capital city of Doha in April 2016. Of course, Iran did not take part in Doha meeting due to fundamental concerns it had about the need to maintain its production level, and for this simple reason, despite all efforts made by Saudi Arabia, the Doha meeting turned into a total failure for Saudi Arabia’s energy diplomacy. Later on, through international consultations between Saudi Arabia and Russia in official and non-official meetings of the G20 group in Chinese city of Hangzhou on September 4-5, 2016, and as a result of diplomatic give and take among OPEC members, the way was paved for OPEC to come up with a unified approach to reduce oil production level through the Algiers meeting. Finally, OPEC members reached an agreement to lower production ceiling through the extraordinary meeting of OPEC oil ministers in Algiers on September 28, 2016.

Perhaps, one of the most important reasons behind willingness of OPEC members and non-OPEC producers to agree over an oil production freeze was the need to produce a possible shock in the market to push oil prices toward their real level, which will affect the fate of many international and regional equations and interactions in 2016. If this scenario is realized in practice, the main winners of this development will be such important actors as Iran and Saudi Arabia, other OPEC members, and Russia as an important non-OPEC oil producing country.

During recent years, and as a result of problems and international threats they have been facing with regard to their interests, some OPEC members and non-OPEC producers have been trying to use oil for political purposes in order to achieve their geopolitical and strategic ambitions. On the opposite, Iran has been following its own moderate approach with regard to oil and energy resources according to which these resources should not be used as political leverage, but must be taken advantage of as a capital commodity to promote development goals.

Due to indeterminate state of the emerging global order, any possible move by OPEC members and non-OPEC producers to regulate the oil price and global oil market will lead to major changes and developments in political groupings and equations as well. Of course, a country like Saudi Arabia has been ignoring the interests and concerns of its neighboring countries for a long time. The fact that Saudi Arabia recently chose to care for the concerns of such an important actor as Iran, can open new ways for reduction of tensions and facilitate more serious cooperation between these two regional rivals to achieve their common interests both inside OPEC and outside. In doing this, they will be also able to settle such crises as those, which are currently going on in Syria, Iraq, and Yemen, and also help OPEC reclaim its real positions in international interactions.

*Behzad Khoshandam
Ph.D. in International Relations & Expert on International Issues


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Iran Review

Iran Review

Iran Review is a Tehran-based site that is independent, non-governmental and non-partisan and representing scientific and professional approaches towards Iran’s political, economic, social, religious, and cultural affairs, its foreign policy, and regional and international issues within the framework of analysis and articles.

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