OPEC Deal Disintegrates After Iran Press Accuses Saudi Arabia Of "Reneging" On Agreement

Furthermore Iran's production concerns, explained previously, are legitimate: "The aggregate total of oil output in Saudi Arabia has reached 10.525 million barrels per day (bpd) indicating a rise of over one million bpd as compared with the year 2014. Iraq's crude oil production also rose from 3.11 million to over 4.776 million bpd in the same timespan. Iran's output level, however, stands at about 3.92 million bpd still lower than pre-sanction levels which were over four million bpd."

As a result, it all boils down to market share:

In other words, Saudi Arabia has, in one sense, seized shares of other OPEC manufacturers during the past decade and, once again though this time with a politically-motivated and non-economic plan, Saudi princes intend to wage a full-blown psychological war against Iran and a number of other OPEC members in order to prevent achieving a comprehensive agreement on reduction of oil output so that they could maintain the highest production capacity while ignoring interests of other members. 

What happens next? According to Iran a full court press by Saudi media "friends" to scapegoat Iran as the offending party should the Vienna summit fail to reach a solution:

No doubt in the remaining hours before the OPEC meeting, Saudi Arabia will resort to some Western media to launch a new psychological war against Iran's oil industry in order to virtually direct attention of market activists from its own uncapped and high output levels to countries like Iran, Iraq and other OPEC countries.  

In the meantime, it is worth recalling that due to the sharp decline in global oil prices from $100 per barrel to lower than $50, any decline in oil market will undoubtedly bring about the greatest loss to Saudis, with a production of over 10.6 million bpd, than it would do to Iran who produces less than four million bpd. 

What makes matters worse for Saudi Arabia is that Iran is now confident it can pursue its oil strategy on its own, and does not need either OPEC or Saudi Arabia to further its interests:

View single page >> |

Disclosure: None

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.