Statement's of Iran's Oil Minister and OPEC+ - Batuhan Özkan


Iran is a country that has an importance in the energy market thanks to its natural resources, geopolitical location, and sphere of influence. As a result of this situation, the Iranian officials' discourse and moves have importance for understanding the developments in energy markets and Middle Eastern politics. On the other hand, OPEC+ is an entity that assumes the decision-maker role in energy markets with output cuts and output growths. So, I believe that taking the statements of the Iranian Oil Minister's statements about OPEC+ as a reference for understanding and analyzing the functions of Iran's OPEC+ and energy policy. In the following paragraphs, I will try to touch on activities of OPEC+, statements of the minister and Iran-OPEC+ relations, and finally, interpretations of these decisions, relationships, and results.

OPEC+ is a large group that emerged with the articulation of some countries (e.g., Russia, Mexico, Kazakhstan) to OPEC. Russia's participation and sphere of influence in the organization is a point that should not be dismissed for understanding the character of the organization. In 2018, OPEC members supplied 35% of oil, and they were the owner of 82% of the proven oil reserves. With the enlargement of OPEC+, these numbers went up to 55% and 90%, respectively. So these countries gained power over the global economy, which has not been seen before. For example, between the beginning of 2017 and March 2020, the OPEC+ coalition implemented a production cut to increase crude oil prices. March 2020 has been a breakpoint for the organization due to Oil Price War. Russia's refusal to continue the production cut paved the way for this war. In the aftermath of Saudi Arabia's move, we witnessed a dramatic decline in oil prices, and this plunge has not been recovered even at the end of the year. When we consider the pressure on the oil-dependent economies that emerged from the remarkable decreases in oil price, such as increasing debts and budget deficits and shut-down of the producer companies, we see the importance of harmony between the member countries.

According to Bijan Zanganeh, Iran's Oil Minister, OPEC+ policies helped balance the oil market. He also expresses that he is hopeful for maintaining the prices at acceptable levels. He also expresses his optimistic views about the future. The last agreement of OPEC+ is easing the output cuts starting from January 2021. In my opinion, this positive approach is worth examining. Because when we evaluate the OPEC+ policies, which is in the direction of output cuts, they favor Iran. Since Iran is a country that has to face Western sanctions, it cannot use its full capacity for oil production. So, production cuts are necessary for the increase in prices, at least stability in prices. Iran is one of the countries which supports the production cuts. In this context, the positive sentiments of the minister are not a surprise for us.

In conclusion, OPEC+ is an organization that is very effective in oil markets and naturally global economy. OPEC's enlargement by new countries that can have a difference of opinion and conflict of interest can be considered a positive situation. Because OPEC+ provides a platform that contributes to the emergence of the zone of agreement, the detrimental effects of the Spring 2020 Oil Price Wars could have been harder to compensate for in the absence of the OPEC + coalition. COVID-19 process is also an important point for understanding the mission of OPEC+ and overcoming the Oil Price War. Since the COVID-19 crisis has been a situation that all countries suffer from, countries had to act harmoniously for humankind's interests. So the consensus of countries under the umbrella of the organization has importance. Although the realist theory in international relations suggests that states are actors who look out for themselves, we cannot ignore the restraining effects of these institutions, alliances, and organizations. Making compromises that can prevent negative results that affect the whole world economically. When we continue with Iran, it can be said that their stance about the OPEC+ organization can be described as "cyclical." Due to the sanctions, they are content with the policies. However, expected or unexpected development may change their position. For instance, Biden, vice-president of the U.S. during the Obama government, which eased the sanctions, can follow the same path, and Iran's interests can conflict with the current decisions of OPEC+.

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