Iran's Membership of OPEC

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Historical Background

Iran was a founding member of OPEC together with Venezuela in the 1960s. Based in Vienna since 1965, OPEC has 12 member states. During the 1970s, OPEC became a prominent actor on the international stage, as member states first flexed their muscles through their greater control of the pricing of crude in world markets. Twice, due to the Arab oil embargo in 1973 and the Iranian Revolution in 1979, oil prices increased steeply in an unstable market. [1]

The Iran-Iraq war in the 1980s split OPEC and led to a decade-long period of low prices as few countries respected their production quotas. Moreover, there was longstanding wrangling over quotas and prices between Iran and Saudi Arabia. However, according to the NY Times despite differences and disagreements between various members, OPEC successfully came together as a largely cohesive business. In 2005, Hossein Kazempour Ardebili, then Iranian representative on OPEC's board of governors, claimed ‘"The situation has changed in the region. Ideology has no place in our negotiations within OPEC. All players are competitors on the market, but before that they are partners within OPEC." [2]

In 2007, OPEC adopted an alphabetical rotation system for the organization's one-year presidency. In 2008 Algeria held the presidency, followed by Angola in 2009 and Ecuador in 2010. Iran was thus "elected" to the presidency for 2011, after last holding the post in 1975 when Jamshid Amouzegar was OPEC president. As of August 2011, the Iranian Governor to OPEC is Mr. Mohammed Ali Khatibi.[3]

Impact of 2012 Iranian Sanctions on OPEC

US and EU sanctions pushed Iran, traditionally the second biggest exporter of oil in OPEC after Saudi Arabia, to third place behind Iraq in July 2012. Iran was the second biggest exporter from May 2002 until July 2012.[4]

In July 2012, Iran’s oil minister, Rostam Qasemi, called for an emergency OPEC meeting to cut output after oil prices fell below $100 a barrel. However, Gulf states in OPEC opposed the meeting. By August 2012, following a jump in oil prices amid fears of limited supply due to sanctions against Iran, Qasemi announced that the OPEC emergency meeting was no longer necessary.[5]

OPEC’s output declined by 450,000 bpd in July 2012, led by Iran as the impact of sanctions hit harder.[6] Iranian output was then recorded at its lowest in 22 years. When sanctions were put in place in January 2012, Iran warned members of OPEC against boosting production to maintain prices, aimed particularly at Saudi Arabia.[7]

References

  1. "OPEC Brief History" OPEC, Retrieved on 3 August 2012.
  2. "With Rare Unity, OPEC Ministers Gather in Iran" NY Times, 15 March 2005.
  3. "Oil and One-Upmanship: The Iran-Iraq Rivalry" PBS, 1 November 2010.
  4. "OPEC output falls" Bloomberg, 31 July 2012.
  5. "No need for emergency OPEC meeting" Pavyand News, 12 July 2012.
  6. "OPEC oil output falls in July on Iran" Reuters, 30 July 2012.
  7. "Iran Warns Gulf Arabs" Washington Times, 15 January 2012.