Why is iran not in opec

As a result, the lifting of sanctions is highly likely, but no one can predict exactly when it will occur. This, in turn, strengthens the uncertainty factor in the oil market. Moreover, it is not always possible to take into account all of the driving forces due to their diversity and constantly changing impact. The main beneficiary of the increase in oil production quotas in May-July was Saudi Arabia, while the UAE increased production only marginally.

Haunted by the idea of the imminent end of the oil era, producers will try to monetize their reserves as profitably and quickly as possible, and the existing quotas can be perceived as a significant albeit necessary obstacle to achieving this goal. There are also other systemic factors that should not be discounted as well.

It is too early to discount the COVID factor, which is currently overshadowed by positive forecasts of a global economic recovery. However, the emergence of new strains of the coronavirus and the deteriorating public health situation in certain parts of the world suggests that this factor can still play a significant role in shaping demand. Finally, in the long run, the U. In , U. This, in turn, makes analysts talk about the beginning of a new shale era that could pose a threat to conventional producers, as was the case before.

Japan, which suspended imports from Iran in May , could begin imports within three months if a deal is struck. And already there are indications that Iran is adjusting its crude grades to meet specific demands of Chinese refiners, especially demand for lighter grades.

A ramp-up would add large volumes of heavy sour and medium sour barrels, as well as some light crude. Growing exports of South Pars condensate would also compete with supplies from the United States, Qatar, and Australia.

For the OPEC countries and allied producers in the OPEC-plus framework, the return of Iranian barrels presents a challenge but has not created a shift in market management.

Following the largest-ever production cuts last year, OPEC-plus is gradually adding more barrels to the market. Increasing air and road travel in the United States and Europe have given OPEC-plus more confidence that the market can absorb these barrels.

OPEC-plus ministers are probably wary of a big output increase from Iran but see no need to take action until there is evidence of a material impact. Indeed, the market has been strong enough to absorb more Iranian barrels without much trouble over the past few months. Slowing the planned output increases would have deprived producing states of revenue, at a time when crude prices have firmed up and countries are anxious to take advantage of stronger demand. Still, sanctions relief for Iran could create challenges for OPEC heading into , shaping future deliberations over whether to hold production steady in the second half of the year.

Production increases from Iran could slow inventory draws and potentially create a looser market Iran is exempt from the current OPEC-plus cuts. The remarkably strong production discipline of OPEC-plus over the past year has been essential to the rebound in oil prices. Several weeks of negotiations this spring in Vienna stalled over the US' insistence that Iran return its uranium enrichment activities to previously agreed levels, while Iran sought immediate sanctions relief and guarantees that future US administrations would not undo the pact.

The discussions could also now be complicated by the deadly July 29 attack on an oil products tanker off the coast of Oman, which the US, UK and Israel have blamed on Iran. Shippers in the region are on high alert for any retaliatory action. Iran has denied involvement. Platts Analytics still expects a deal can be forged after Raisi is inaugurated, with Supreme Leader Ali Khamenei, who controls much of Iran's policy, seeking to give the new president a lift at the start of his term.

But at this stage, no specific plans have been made. Robust oil demand growth for now may keep all producers happy, but any dip or plateau in consumption, as many analysts say could happen this winter, will put the squeeze on Iran.

In fact, oil was something that brought them together. The oil producing group was seen as a way to challenge the dominance of western oil companies that controlled the majority of global oil supply. At the same time, they also have a shared goal which is to get the best possible price for their product," he said.

Qatar's exit from OPEC changes the game even further and exposes wider divisions, which could make cooperation on oil impossible. The degree of cooperation and consent within OPEC nowadays is a bone of contention for some members.