By David Ramin Jalilvand, for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iran Business News.
OPEC members have in recent months repeatedly met to discuss production cuts. The cartel’s members are suffering from the dramatic decline in oil prices over the past two years, which has seen crude dropping to between $40 and $50 per barrel from more than $100 in 2014.
This has caused tremendous pressure on both government budgets and economies of oil exporting countries.
Faced with these challenges, OPEC members finally agreed in a September meeting in Algeria to cut production — in principle. Exact quotas remain to be negotiated, which is the subject of an upcoming meeting in late November.
While other OPEC members still need to agree on production quotas, Iran — together with Libya and Nigeria — was granted an exemption. This comes as Tehran has repeatedly expressed its unwillingness to accept any reduction of its oil output.
In August, Oil Minister Bijan Zanganeh said, “Iran will cooperate with OPEC to help the oil market recover, but expects others to respect its rights to regain its lost share of the market.” Iran’s hesitation to cut production alongside other OPEC countries can be explained by a number of factors, reflecting a melange of political and economic aspects.
First, there is domestic pressure on President Hassan Rouhani’s administration to show that the nuclear deal is benefitting the country. Rouhani, who is seeking re-election next year, was elected on his promises of a nuclear deal and economic recovery. On the former, his administration delivered.