The oil production cartel, which is meeting in Vienna today, is set to keep its production target unchanged.
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With Brent crude, the global benchmark, hitting a two-month high of more than $113 per barrel, oil ministers from the group which spans Venezuela to Saudi Arabia have said they want to keep targeting production of 30m b/d.
In spite of the apparent consensus, this week’s meeting has seen aggressive jockeying for internal position within the cartel.
Speaking to Iranian journalists in Farsi minutes before ministers went into a closed-door meeting, Bijan Zangeneh, Iran’s oil minister, said: “Under any circumstances we will reach 4m b/d even if the price of oil falls to $20 per barrel.”
“We will not give up our rights on this issue,” Mr Zangeneh added, suggesting Opec would be able to accommodate rising Iranian production to keep prices high.
Opec pumps around a third of the world’s crude oil supplies, and as the only source of spare production capacity plays a key role in setting prices.
Brent has averaged close to $110 per barrel this year, easily above the group’s unofficial target, as production disruptions in Nigeria and Libya have offset rapidly growing US shale oil output.
Buoyed by an interim agreement on its nuclear programme ten days ago, Iran said it would raise production from around 2.8m b/d today to 4m b/d next year.
Iran’s president Hassan Rouhani is looking to pursue a foreign policy of moderation to revive deadlocked nuclear talks with the west after tough financial sanctions have brought the Islamic Republic’s economy to a standstill
Iraq, meanwhile, has also said it plans to increase production by 1m b/d next year to 4mb/d.
That would put pressure on prices, and push the cartel to respond by reining in production from other members, although both countries face significant challenges in meeting their ambitious targets: Iran faces months of tricky negotiations before sanctions could be lifted, and Iraq’s oil industry is labouring under security and infrastructure problems.
Saudi Arabia, the world’s largest oil exporter and de facto leader of the cartel, would face most pressure to cut back on production to accommodate Iran and Iraq, as the kingdom has been producing at near record levels of more than 10mb/d as production from other Opec members has faltered.
But Saudi officials have suggested Iranian and Iraqi production growth is unlikely to materialise quickly, and ahead of the meeting Ali al-Naimi, the Saudi oil minister, brushed off Iran’s aggressive stance on price:
“You are preoccupied by Iran and that is not a good preoccupation,” he said. “You know what is going to happen if the price goes to $20? You know how many countries would be out of producing, including shale oil, including Canadian sands oil, including subsalt oil. All of that will be gone.
Brent was trading down 42 cents at $112.20 a barrel by mid-morning in London.