VIENNA — Nigeria’s oil minister is suggesting that OPEC will maintain present output levels as it seeks to lessen Saudi-Iranian rivalry.
Jose Botelho de Vasconcelos says that “consensus …. is the goal of our organization.” That suggests the ministers are moving toward maintaining the status quo as middle-ground between Saudi efforts to increase production and an Iranian push to cut output.
The minister spoke to reporters Thursday ahead of a meeting of the 12 oil ministers of the Organization of the Petroleum Exporting countries focused on price and production targets.
Referring to the existing output target of 30 million barrels a day, he said “I think this ceiling is good.”
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
OPEC ministers are coming into a meeting deeply divided over how much crude to pump, with Saudi Arabia keen to keep a lid on prices, rival Iran pushing to cut production and Iraq expected to back Iran, its longtime foe under Saddam Hussein.
The divisions will test the unity of the Organization of the Petroleum Exporting Countries, which sees itself as the oil market’s prime regulator. The 12-nation group is likely to paper over differences Thursday by deciding to leave output unchanged despite the current overproduction. But the disagreements might be too deep to resolve and the meeting could break up in disarray.
The gathering comes as many of the world’s major consuming nations are struggling against a stubborn economic downturn that could be exacerbated by any decision to inflate oil prices by cutting supply.
But Thursday’s meeting has a significant geostrategic dimension as well. Sanctions levied by the U.S. over Tehran’s refusal to curb its nuclear program have already cut significantly into exports of Iranian crude – from about 2.5 million barrels a day last year to between 1.2 and 1.8 million barrels now, according to estimates by U.S. officials. A European Union embargo on Iranian crude that starts July 1 will tighten the squeeze.
The embargo is exacerbating tensions between traditional rivals Saudi Arabia – a Sunni Muslim nation – and Shiite Muslim Iran, who are jockeying for influence in the Middle East as well as in OPEC.
Iran has warned the Saudis not to use the oil weapon against it by increasing supplies to countries that no longer get Iranian crude due to the sanctions, and Iranian oil minister Rostam Ghazemi on Wednesday warned the United States and Europe that their tactics will backfire.
“The use of instruments such as sanctions or direct military interventions in energy-producing countries will increase the price of oil and market volatility,” he told an OPEC seminar.
For his part, Saudi oil minister Ali Naimi has denied tightening the screws on Iran, telling reporters his country sells to whoever buys.
“We don’t sit and say ‘we want to sell to this country or that country (or) whatever,” he said.
But Saudi overproduction is clearly rankling the Iranians. In comments to Iran’s Mehr news agency, former Iranian oil minister Gholam Hossein Nozari noted that “political issues have overshadowed OPEC,” while analysts say the political implications of Saudi Arabia’s production policy cannot be ignored.
“You do wonder what’s tied up perhaps with the Iranian political issue,” said Neil Atkinson, director of Energy & Utilities Research and Analysis. “Of course the lower the price at the moment the more damage that does to Iran.”
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