Following OPEC's blame-mongering statement earlier today -"observers should not be quick to judge or criticize" the organization - it appears mutiny is occurring within the cartel as OPEC sources report Saudi Arabia threatening to "steeply raise" output following Iran's refusal to cap output. WTI is tumbling on the news, testing towards a $43 handle.
OPEC blames analysts for exposing the cartel's impotence:
At OPEC, we remain deeply optimistic about the possibility that the Algiers Agreement will be complemented by precise, decisive action among all producers — the kind of action that we need in order to see prices supported and short-term volatility avoided.
In the meantime, industry observers should remember that they should not be too quick to judge or criticize the Organization or its Member Countries. Over the years, we have seen how wildly inaccurate their predictions have been.
What many of them have failed to recognize is that OPEC’s great strength is its global reach and its diversity. Its great value is found in the continuing willingness of its Member Countries to confer, consult and coordinate actions if and when necessary.
As the years have passed and the market has evolved, the importance of OPEC’s role has, in fact, only increased — proving all those unfortunate nay-sayers wrong once more. Related: Bahrain’s Masterplan To Become A Global Gas Hub
But what really hit oil this morning was Reuters reporting:
Clashes between the two OPEC heavyweights, which are fighting proxy wars in Syria and Yemen, have become frequent in recent years.
Tensions subsided, however, in recent months after Saudi Arabia agreed to support a global oil supply limiting pact, thus raising the prospect that OPEC would take steps to boost oil prices.
But a meeting of OPEC experts last week, designed to work out details of cuts for the next OPEC ministerial gathering on Nov. 30, saw Saudis and Iranians clashing again, according to four OPEC sources who were present at the meeting and spoke to Reuters on condition of anonymity.
"The Saudis have threatened to raise their production to 11 million barrels per day and even 12 million bpd, bringing oil prices down, and to withdraw from the meeting," one OPEC source who attended the meeting told Reuters.
OPEC headquarters declined to comment on discussions during the closed-door meetings last week. Saudi and Iranian OPEC delegates also declined official comments.
The Saudi threat followed objections by Iran, which said it was unwilling to freeze its output, the same OPEC sources said. Iran has argued it should be exempt from such limits as its production recovers after the lifting of EU sanctions.
The Saudi threat will revive memories of a pump war that Riyadh embarked on at the end of 2014 to claw market share back from higher-cost producers. Iran, along with other OPEC price hawks, have severely criticized the Saudi strategy.
Related: Electric Cars To Reshape Copper And Oil Demand
Which has sent WTIO back near $43 handle...
(Click to enlarge)
As a reminder, Goldman said if the deal falls apart, as it now seems to be, that "weakening oil fundamentals warrant oil prices in the low US$40s/bbl in our view if OPEC is unable to deliver a convincing agreement."
ADVERTISEMENT
(Click to enlarge)
You Are Here...
By Zerohedge
More Top Reads From Oilprice.com:
- Debunking The Massive EIA Crude Build
- Nigeria Requires Constitutional Revisions To Stop Oil Attacks
- Is A Pan-Asian Power Grid Possible?
