The Iran Project

Sanctions pressures spur debate on Iran’s OPEC membership


The agreement by OPEC to exempt Iran from a much-debated oil freeze plan has been praised by the country’s media as a victory with most of the credits going to the country’s Petroleum Minister Bijan Zanganeh. (Photo by Shana)

Bourse and Bazaar | Reza Zandi: Today, the 24th edition of the Tehran International Oil and Gas Exhibition opens. Tomorrow, the U.S. waivers permitting the purchase of Iranian oil will be revoked. In 2016, the year when the JCPOA was implemented, around 600 foreign companies came to Tehran to participate in the oil exhibition. This year, just 65 foreign companies are taking part.

Mohammed Barkindo, the Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), will arrive in Tehran tomorrow to visit the oil exhibition. Iran is one of the five founding members of OPEC, which is set to mark its 60 year anniversary. Despite this long history, the extraordinary challenges facing Iran’s oil industry have spurred industry leaders to debate three scenarios regarding Iran’s membership in OPEC.

In the first scenario, Iran would suspend its membership in OPEC until the oil sanctions are lifted. In the second scenario, Iran would announce its departure from OPEC. In the third scenario, Iran would remain a member of OPEC and strive to use its influence within the organization to address the new challenges. These scenarios have yet to be formally deliberated by government officials, but reflect a growing debate among key figures in the oil industry.

Should Iran suspend its membership in OPEC, the remaining members will likely face pressure from Saudi Arabia and the United Arab Emirates to abolish the membership of those countries which have suspended their participation for more than six months. What would be the next step? Would it not be a political failure for Iran to be ejected from an organization of which it is a founding member? Clearly, suspension of membership in OPEC is an unacceptable scenario.

There is no doubt that given the present oil embargo on Iran, Iranian officials will have limited influence on OPEC decisions beyond expressing expert opinions. It will obviously be very difficult for Bijan Namdar Zanganeh, Iran’s oil minister, to attend OPEC meetings for this reason. As a member of OPEC, the number of barrels produced and exported is determined by the consensus of the cartel, so Iran would presumably need to follow targets on which it has had limited input. Hard days await Iran’s oil minister in Vienna. But what would Iran gain by leaving OPEC? Such a move would be a loud political protest against Saudi Arabia and the UAE, which have taken practical steps to weaken Iran’s oil industry. But afterwards, will those rivals not be able to more easily pursue their energy politics, and use OPEC to further advance the isolation of Iran?

The sober, resolute, and reasonable approach would be for Iran to maintain its membership in the most influential organization of the developing world. Iran should remain a member of OPEC to ensure it can continue to engage with global media and influence public opinion on energy matters. It is true that Iran will be unable to meaningfully influence OPEC’s decisions in the near future, but the country should still demonstrate a resolute approach to unprecedented pressures in the energy market. Participating in OPEC meetings provides an important opportunity to remain close to future decisions. Any effort to isolate Iran would reflect the strategy of Saudi Arabia, the UAE, and their bullying partner, the United States. During OPEC meetings and on the sidelines, Iran’s oil minister can expose the cynical intentions of some members to harm the interests of the Iranian people. OPEC, aside from its role advancing the interests of oil producing states, gives Iran a platform to be heard. Iran should not give away this platform. It should not cede the table to others.

This article was originally published in Persian in Hamshahri Newspaper.

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