BCN-01, 02 OPEC showdown looms as Iran, Saudi argue over output hike

302

ZCZC

BCN-01

OPEC-OIL-ENERGY-MARKET-MEETING

OPEC showdown looms as Iran, Saudi argue over output hike

VIENNA, June 22, 2018 (BSS/AFP) – OPEC ministers are bracing for a stormy
meeting in Vienna Friday where they will discuss a Saudi proposal to hike oil
output despite fierce resistance from Iran, setting the stage for a showdown
between the arch foes.

At stake is the fate of an 18-month-old supply-cut deal between members of
the Organization of the Petroleum Exporting Countries and allied countries
credited with clearing a global oil glut and lifting crude prices.

But Saudi Arabia, backed by non-member Russia, says the time has come to
raise production to meet growing demand and appease major consumer countries
like the United States, India and China who have complained about the spike
in prices.

“Our customers have spoken loudly and we must listen to them,” Saudi
Energy Minister Khalid al-Falih said at a technical meeting on the eve of the
OPEC gathering in Vienna.

But hopes of a compromise were dealt a blow when Iranian Oil Minister
Bijan Namdar Zanganeh walked out of the meeting early, telling reporters: “I
do not think an agreement can be reached.”

Iran has bristled at the thought of easing the output ceiling at a time
when its oil industry is facing renewed sanctions over US President Donald
Trump’s decision to quit the international nuclear deal with Tehran.

However Riyadh, which cheered Trump’s move, is under pressure from its US
ally to open the spigots as Trump hopes for lower pump prices ahead of
November’s mid-term elections.

Iran’s Zanganeh, speaking to reporters on the sidelines of a Vienna
seminar earlier this week, accused Trump of trying to politicise OPEC and
said it was US sanctions on Iran and Venezuela that had helped push up
prices.

Venezuela, in the throes of an economic crisis that has slashed its
petroleum production, is also opposed to changing the oil cartel’s output
policy, as are several other countries who would struggle to immediately
increase production.

But Saudi Arabia has the backing of Russia, which is facing mounting calls
from domestic oil firms to end the cutbacks so they can cash in on the higher
oil prices.

MORE/HR/0925

ZCZC

BCN-02

OPEC-OIL-ENERGY-MARKET-MEETING 2 LAST VIENNA

Russian Energy Minister Alexander Novak, who attended Thursday’s technical
meeting, said it was “very important” not to allow the oil market to
“overheat”.

– Face-saving compromise? –

The 14-nation OPEC cartel and its 10 non-member partner nations, known as
OPEC+, together account for more than 50 percent of the world’s oil supply,
giving them huge sway over the global market.

The deal they initially agreed called for production to be trimmed by 1.8
million barrels per day, but OPEC claims production restraints and
geopolitical factors have actually seen output fall by far more, to around
2.8 million bpd.

Speaking after Thursday’s meeting, ministers said they would recommend
lifting production by a nominal one million barrels a day at Friday’s OPEC
meeting and Saturday’s gathering of non-OPEC partners.

“Not every country can meet this number,” admitted Saudi’s Falih, in a nod
to the problems in Venezuela, Iran and Libya, where clashes between rival
factions have damaged key oil infrastructure.

The Saudi- and Russia-led proposal would allow several hundred thousand
more barrels of oil to come to the market without however amending the
milestone pact — paving the way for a face-saving compromise with Iran.

But Iraqi Oil Minister Jabbar al-Luaibi suggested it was far from a done
deal.

The proposal was approved by a majority, but “not everybody”, he told
reporters.

BSS/AFP/HR/0930