Over the past year and a half, oil prices have dropped nearly 70 percent amid a supply glut. Global markets are distressed and the economies of oil-exporting countries are shrinking. The impact of cheap oil is so profound that a generation of younger Saudis may have to work for a living.
On Tuesday, a quartet of major oil producers—Russia, Saudi Arabia, Venezuela, and Qatar—proposed an agreement to limit the global supply by reining in production. The announcement is significant because it’s the first time in more than a decade that members of OPEC, the oil-producers’ cartel—Saudi Arabia, Venezuela, and Qatar—and a major non-member—Russia—agreed to curb production. The only catch: Other major oil-exporting states have to agree.
The plan had early skeptics, including those who believe the parties involved would cheat on the deal anyway. But just hours after the proposal made headlines, Mehdi Asali, the OPEC envoy for Iran, which possesses the fourth-largest proven oil reserves, dismissed the plan as “illogical.”
“[W]hen Iran was under sanctions, some countries raised their output and they caused the drop in oil prices,” he told a local paper. “How can they expect Iran to co-operate now and pay the price?”