Saudi Arabia and the Persian Gulf Cooperation Council countries’ historic failure at the 159th meeting of OPEC to increase the oil production, means that the new powerhouse in OPEC is Iran, oil analysts and energy experts stated.
Saudi Arabia is angry because of failure to satisfy OPEC’s member for increasing production, said analysts aftermath of the OPEC meeting which was hold in Vienna on Wednesday.
While Saudi oil minister called 159th meeting of the Organization of Petroleum Exporting Countries as “the worst meeting OPEC have ever had”, the group's Secretary General Abdalla Salem el-Badri said: the failure of the Organization of Petroleum Exporting Countries to reach a consensus at its meeting Wednesday was a normal dispute that doesn't mean its quota system is dead.
“Saudi Arabia, maybe they were angry, but this is normal in OPEC. When we have a debate sometimes we don't agree,” he told reporters on the sidelines of the World Economic Forum in Vienna, Dow Jones reported.
Analysts depict Saudi Arabia ‘anger’ for sake of its failure versus of Iran in the OPEC meeting. For example The Dayton Daily News wrote in an essay: “While the Saudis and the Iranians are frequently at loggerheads over pricing at OPEC meetings, member countries usually fall in behind the lead of Saudi Arabia, which produces most of the group’s oil. But this time the Saudi-Iranian rivalry resulted in a deadlock.”
Saudi not committed to quota
While Saudi Arabia shows its unhappiness to OPEC members’ decision on not increasing quota, some experts believe that the largest oil producer has not showed much commitment to OPEC quota system.
James Zhang at Standard New York Securities Inc, the Standard Bank Group told Oil and Gas Journal: “The quota itself is largely symbolic, as OPEC members collectively exceeded the current quota by 2.6 million b/d in May, excluding Libya and Iraq. More importantly, as of the production levels in May, the four member countries who backed a quota increase collectively hold 3 million b/d out the total 4.5 million b/d OPEC spare capacity.
New powerhouse in OPEC is Iran
Olivier Jakob at Petromatrix, Zug, Switzerland- a longtime observer of OPEC sessions -told Oil and Gas Journal: “Iran tried to move the decision to a month or two from now at an emergency meeting to be held in Tehran.”
“Instead of Ahmadinejad going to OPEC in Vienna, it would be OPEC coming to Ahmadinejad in Tehran. Saudi Arabia and the other Persian Gulf Cooperation Council (PGCC) countries, however, did not seem to like that proposal very much, and everybody parted their own way in a very unusual manner,” Jacob added.
He said, “Saudi Arabia and the PGCC countries gave clear signals after the historic failed meeting that they would go on with their plan to increase production.
Saudi Arabia now “has no choice” but to maintain its increased production, said Jakob. “If it does not, then it means that the new powerhouse in OPEC is Iran, hence a power struggle for the leadership of OPEC is not necessarily price-supportive,” he said.
U.S. has no influence on OPEC
While United States had pressured its allies in OPEC to increase the production, OPEC formally opposed to U.S. goal. Some experts believe that Iran Presidency in OPEC was the main reason for U.S. failure.
Former Shell Oil President John Hofmeister said he is not surprised OPEC announced it will keep production levels.
Hofmeister told Fox News that President Barack Obama has no influence on the Organization of Petroleum Exporting Countries and if he thinks he does “he better rethink how much authority he really has.”
Hofmeister said the 12-member oil group is divided amongst themselves, with the “truly anti-American crowd, the Venezuelans, the Iranians, and others, but there is no outcome that is going to benefit consumers any time soon.”
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