Iran's Oil Minister Bijan Zanganeh on Monday sent a letter to OPEC President Suhail Mohamed Al Mazrouei, warning him that the organization would 'gradually' lose its effectiveness unless member countries fully adhered to their commitments.
In the letter posted in full by the ministry's news agency Shana, Zanganeh referred to OPEC's June 22 decision [at the 174th meeting] wherein member states agreed to increase crude oil production by around 1 million barrels per day as of July 1, and adhere to 100 percent conformity level.
'However, the aforesaid decision neither warrants Member Countries the right to exceed their production level above the allocated quota decided at the 171st Meeting of the OPEC Conference, nor the right to redistribute the production cut quota among Member Countries,' the minister said.
'This implies, the decisions and production ceiling agreed upon at the 171st Meeting of the OPEC Conference are still valid, and the production level of Member Countries must be in full compliance with these agreed commitments.'
Zangeneh further said that according to the OPEC Secretariat's latest monthly report, the production levels of some member countries in June was 'far above the agreed production level allocated to them,' which he said was 'a violation of their commitments undertaken at the 171st Meeting'.
'We are concerned that this violation may continue in the remaining implementation months ahead and in contradiction with the agreement adopted at the 171st and 174th Meetings of the OPEC Conference and turn into a routine practice,' he noted.
The minister warned of the possible ramifications of this 'violation', which include in his opinion a 'gradual erosion' of the organization's effectiveness.
'In my view, in case the OPEC Member Countries do not fully adhere to their commitments, the effectiveness of this Organization as the only developing countries' intergovernmental organization with almost sixty years of history, will be gradually eroded, and the responsibility of this would lay with those Member Countries violating their commitments,' he said.
Zangeneh urged OPEC's Joint Ministerial Monitoring Committee (JMMC) to monitor the production of member countries from July -- the first month of implementation of the Resolution 174.513 -- and report country by country the extent of their conformity to the OPEC Conference.
-JMMC 'not authorized to interpret OPEC decisions'
Zanganeh also sent a letter to his Saudi counterpart, Khalid Al Falih, in which he said, the JMMC was 'not authorized to interpret the Conference decisions,' and its only mission would be 'monitoring and reporting the level of conformity of countries to their production adjustment commitments one by one as it has been practiced so far'.
'In my opinion, as far as production and adherence to quotas are concerned, only decisions adopted unanimously at OPEC Conference by Their Excellencies - the OPEC Ministers are valid and shall constitute the basis for action by OPEC.
'To that effect, the JMMC, as per its mission, should continue to monitor and report production, and conformity levels of countries to their commitments for each country individually an done by one,' he added.
Global oil supply rose by 370 thousand barrels per day (kb/d) to 98.8 million barrels per day (mb/d) in June, according to the International Energy Agency's (IEA) report issued last Thursday.
Crude production from the OPEC increased month-on-month by 180 kb/d in June to 31.87 mb/d, the IEA said. According to OPEC, however, the group's production in June rose by 173,000 barrels to 32.33 mb/d.
The IEA said the growth was mainly due to higher Saudi Arabian output based on last month's OPEC agreement, rising by 430 kb/d to 10.46 mb/d.
Iraq had the second biggest increase, with its output climbing by 80 kb/d to 4.55 mb/d - the highest since the end of 2016.
By Hale Turkes
Anadolu Agency
energy@aa.com.tr