Iran opposes Saudi oil output cut proposals
SAUDI Arabia faced resistance from Iran to proposals to restore a production target scrapped at Opec’s last meeting in December as efforts to build unity were undermined by persistent divisions within the producer group.
While Saudi Arabia signalled on Wednesday that the nation was ready to consider a surprise deal with fellow Opec members, attempting to mend divisions that had grown so wide many dubbed the organisation as good as dead, Iran opposes a group production target. “We will be very gentle in our approach, so we don’t shock the market in any way,” Saudi Arabia’s new Oil Minister, Khalid Al-Falih, said before he sat down with his counterparts in Vienna yesterday. “We are satisfied with the price movement over the last few months and think it will continue to gently edge up without much intervention, assuming that more or less Opec production stays where it is.”
The differences between Opec’s arch rivals, Saudi Arabia and Iran, echo the demise of a proposal to freeze production in April. Saudi Arabia made that deal contingent on the participation of Iran, which has insisted on its right to boost crude output to pre-sanctions levels.
Kuwait has also questioned the need for a production target, even as a rebound in oil prices eases tensions within the group.
“A general quota for Opec with no country quotas has no meaning,” Iranian Oil Minister Bijan Namdar Zanganeh said yesterday. “It’s not possible to control or supervise and what it means is that anyone can do whatever they like and just say that it’s within the share.”
Zanganeh said that a country-quota system might be difficult to achieve at yesterday’s gathering.
As ministers sat down to meet in Vienna, Saudi Arabia, the organisation’s largest oil exporter, was discussing ideas, including restoring a production target, according to delegates familiar with the situation, asking not to be identified because the talks are private. Still, no formal proposal has yet been made.
“Opec is still all over the place, but countries are groping for a way to send a signal of unity to the market,” said Bob McNally, the chairman of the Rapidan Group, who is in