Saudi Arabia and Iran expected clash at OPEC meeting

Saudi Arabia and Iran may clash at the OPEC meeting later this week after the Gulf kingdom is expected to push for increasing oil output and is likely to be met by opposition from Iran.

Saudi Arabia is likely to be in favor of a rise in output to reduce prices and support economic growth, but Iran’s OPEC governor has dismissed the need to lift supplies.

“There is no need to increase OPEC production in the 159th meeting of this organization,” said Iran’s OPEC governor, Mohammad Ali Khatibi, according to reports citing the Oil Ministry Website SHANA.

The Organization of the Petroleum Exporting Countries (OPEC) are expected to discuss raising crude supply next week for the first time since 2007, in a move that could weaken $100 oil prices and lessen the impact of high energy costs on economic growth.

Raising supply targets by as much as 1.5 million barrels per day (bpd) would, in part, “calm” oil prices and plug the gap left by Libya where civil war cut the output, a delegate told Reuters.

Signs that higher oil prices have been destroying demand in the West, confirmed by the worst United States jobs report since September, are worrying a group of OPEC's core members led by Saudi Arabia, Reuters reported.

Saudi Arabia had agreed on Sunday to double its crude oil exports to India in a move that would reduce the Asian country’s dependence on Iranian crude.

Analysts suggested the kingdom was seeking to weaken its regional rival Iran by supplying crude that India would otherwise need to import from Tehran.

The Kingdom currently exports 6.2 million bpd according to OPEC estimates and is the world’s largest oil exporter.

“Through oil diplomacy, Saudi Arabia hopes to sap Iran of important regional partners, a diplomatic coup the US and other western nations have so far failed to achieve,” Aaron Mattis wrote in the Harvard International Review.

The OPEC meeting on June 8 looms and analysts now wait to potentially see Iran’s case for opposing the output increase.

(Eman El-Shenawi, a writer at Al Arabiya English, can be reached at: [email protected].)