Without the implementation of a systematic quota, OPEC cannot have control over the oil market. The quota ought to be based on objective criteria, including countries' reserves, production capacity, population and gross domestic product, Shana news agency quoted Mehdi Asali, Iran's representative to OPEC, as saying Saturday.
Referring to the fact that all OPEC members should reach consensus regarding the quota system, Asali noted, "Supposing Iran's export increases to two million barrels a day, in the worst scenario possible prices will halve and Iran's revenue will not be affected that much. Nonetheless, Saudis will incur heavy losses under the circumstances as they will not be able to double their exports.
According to the official, Iran's request to other members to make room for Iran in the market is quite reasonable as OPEC has already experienced such a scenario in Iraq-Kuwait war during which the two states stopped production. As a result, other members increase their quotas to keep prices stable. Nonetheless, as soon as the conflict was over, other members declined their production ceiling to make room for Iraq and Kuwait once again. Asali is of the opinion that Iran has been under punitive sanctions and upon their removal, OPEC members should help the state to resume its lost position.
Underscoring the fact that Saudis have always suggested they lead the organization, Asali emphasized that it is very unlikely Saudi Arabia can keep its 10.5 million barrels a day production ceiling more than a few months. Global oil demand is on the rise; consequently, even if OPEC members keep the present ceiling, Iran will be able to play a major role in the market.
"OPEC is and will be an influential organization and we should not terminate our membership due to economic issues as well as its international status," the representative said."OPEC will be a key player in the oil market in the future as it dominates a huge part of world's oil resources. Nevertheless, members' disagreement over some issues is deemed to be natural. Supposing the organization did not exist, prices could have fallen further."
Elaborating on Iran's long-term strategic principles to maximize members' revenue, he announced that the first step is to formulate a fair price yet competitive regarding global economic situation and renewable fuel production costs. The second step is to estimate the demand and divide the quotas among the members based on an effective system. The last but not least is to create a monitoring system to control the quotas so that none of the members disregards them.
