WTI Crude

Loading...

Brent Crude

Loading...

Natural Gas

Loading...

Gasoline

Loading...

Heating Oil

Loading...

Rotate device for more commodity prices

Iran Wants To Overcome Differences With Saudi-Arabia

Iran’s oil minister, Bijan Zanganeh, says that despite their general differences over Islam and specific quarrel over Yemen, his country and Saudi Arabia have more in common than may be immediately evident.

Zanganeh said he hopes to meet with Saudi Oil Minister Ali al-Naimi on the sidelines of OPEC’s June 5 meeting at the cartel’s headquarters to discuss how to overcome their discord, according to a report on May 24 by Iran’s Mehr news service.

Iran, a predominantly Shi’a Muslim state, has long been at odds with the Sunni royal family in Saudi Arabia. Both countries are fighting what many observers are calling a proxy war in Yemen, as Yemeni Houthi rebels have taken over the country after ousting its Sunni-led government.

Related: Saudi Arabia Planning For Transition To Renewables

Saudi Arabia has accused Iran of helping the Shi’a Houthis, which Iran denies. Meanwhile, since March 26, Riyadh has been leading a coalition of Sunni nations to conduct air strikes against the Houthis.

Despite these differences, Zanganeh said, Iran and Saudi Arabia agree that OPEC should increase oil production despite the current glut in oil. Last autumn, Iran was vocal in its call for the cartel to reduce production to shore up prices because of a fuel oversupply. But at its November meeting, under Saudi influence, the 12-nation group decided to maintain production at 30 million barrels per day.

The glut was caused in large part by a surge in shale oil production in the United States, and OPEC kept production high – and prices low – in a price war to reclaim market share lost to the U.S. boom.

Related: This $16 Billion Fund For Gold Mining Could Shift Market Dynamics

But in December, Iran’s president, Hassan Rouhani, without citing Saudi Arabia by name, said the United States wasn’t the only target of the cartel’s price war.

“The fall of the oil prices is not just something ordinary and economical. This is not due to only global recession,” Rouhani told his cabinet on Dec. 10. “The main reason for it is [a] political conspiracy by certain countries against the interest of the region and the Islamic world and it is only in the interest of some other countries.”

Rouhani said at the time that Iran would never forget such “treachery,” but in the more recent Mehr dispatch, Zanganeh said his country holds no animosity to Saudi Arabia. In fact, he stressed that his government now agrees that OPEC production should be higher.

Related: Exxon Setting Its Sights On Iranian Oil Fields

Zanganeh may simply be reflecting Tehran’s realization that Saudi Arabia can’t be persuaded to cut output. “Lowering OPEC’s production ceiling requires consensus between all members … [U]nder current conditions it seems unlikely that the OPEC production ceiling will change,” he was quoted as saying.

And Iran has been showing increasing confidence that Western sanctions imposed on it because of its nuclear program will be lifted fairly soon. It already has called for OPEC members to trim production by at least 5 percent, or about 1.5 million barrels per day, in order to make room for Iran’s expected full return to the oil market.

Iran has expressed interest resuming the pre-sanctions export of about 2.5 million barrels. It is now forced to limit these shipments to 1.1 million barrels per day.

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News