At the same time, OPEC officials argued the cartel was alive and well, scoffing at suggestions that its authority was eroding to the point where it will soon be negligible.
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Tensions were less acute on Thursday as Saudi Arabia’s new energy minister, Khalid al-Falih, showed Riyadh wanted to be more conciliatory and OPEC decided unanimously to appoint Nigeria’s Mohammed Barkindo as the group’s new secretary-general. “OPEC will be powerful, will be strong”.
With a recent rally in oil prices, OPEC ministers are under less pressure to act now as they wait to see how much of an impact a decline in production in the US and other non-OPEC countries will have on global oil markets.
Oil producers are set to meet again November 30. Since the lifting of nuclear-related sanctions this year, Iranian production has roared back to almost four million barrels a day, around the same level as before the imposition of the sanctions. “It is something we can not accept”. Oil output continued to drop, falling to 8.735 million barrels a day from 8.767 million in the prior week.
Iran resisted overtures from OPEC’s largest producer Saudi Arabia to restore a production target scrapped at the group’s last meeting in December.
But Iran already put its foot down against quotas of any kind in April.
Widespread doubt has been cast on whether the OPEC meeting will have any impact in swaying the cartel’s members towards restricting output over the need to raise prices.
Because of supply disruptions elsewhere, the Middle East’s low-priced producers see little reason to restrain output as overall market conditions have improved significantly for them this year. “But what is also important is that Saudis are not planning to flood the market and want higher prices”, he added. The group’s talk of freezing production in recent months helped buoy oil prices from 13-year lows reached earlier this year.
Saudi Arabia expressed confidence Thursday that oil prices will keep recovering, cementing expectations that a divided OPEC will decide to keep crude gushing at its meeting in Vienna.
That clashed with Iran’s determination to produce all out – and contributed to foiling agreement on any kind on an OPEC output ceiling.
“It doesn’t make sense for Iran to commit to a production freeze”, said Robin Mills of Quamar Energy in Dubai.
While Iraq and the United Arab Emirates, a key ally for Saudi Arabia, said they favored an output ceiling, another Gulf state, Kuwait, illustrated the divisions within OPEC.
International Brent crude oil futures was just under $50 a barrel on Thursday.
OPEC president Mohammed Bin Saleh al-Sada denied that the organization was fading. Instead, he described the cartel as “a dynamic living organ responding to changes”.
“The world has changed, is changing and will change”, he told reporters Thursday, “so OPEC is responsive to change… interacting with facts on the ground”. It’s a sign of continued dissension within OPEC as well as confidence that its strategy of all-out production is working to rebalance the markets.
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The differences between OPEC’s arch rivals, Saudi Arabia and Iran, echo the demise of a proposal to freeze production in April.
