Opec Opens Conference on Oil Production Saudi Arabia Supports Increasing Iran Production
The Organization of the Petroleum Exporting Countries (OPEC) is scheduled to meet in Vienna on the 22nd of this month to discuss the next phase of the oil production policy. A number of media reported that Saudi Arabia, the top oil producer in OPEC, has been pressured by the United States to increase its output in order to stabilize oil prices. Iran and its member countries with insufficient production capacity expressed opposition.
Agence France-Presse reported that oil officials from OPEC member countries began arriving in Vienna on the 19th. Russia and other non-OPEC members will also meet in Vienna to negotiate oil production policies with OPEC.
Non-OPEC oil-producing countries such as OPEC and Russia have coordinated production cuts since 2017, raising the price once dropped to US$30 per barrel to more than US$70. This production cut-off agreement is scheduled to expire at the end of this year.
The U.S. government announced on May 8th that it would withdraw from the Iranian nuclear issue, and ordered the resumption of sanctions on Iran suspended by the agreement, including energy sanctions. This caused the market to worry about the shortage of crude oil supply.
Reuters reported that the United States has privately pressured Saudi Arabia and other OPEC members to require them to increase their oil production in order to offset the impact of the United States blocking the export of Iranian oil.
President Donald Trump repeatedly complained that the price of oil was too high. In a “tweet” letter posted last week, he wrote: “The oil price is too high. This is all OPEC's. Not good!”
In addition, the United States is scheduled to hold a mid-term congressional election in November this year. Volatility in oil prices is not conducive to the election. Alita Sen, an analyst at Energy Vision Consulting in the United Kingdom, said that the oil policy is related to the political situation and the United States does not want oil prices to rise. Sen speculated that "the United States is definitely exerting pressure on Saudi Arabia."
The increase in production is not difficult for countries with strong oil production capabilities such as Saudi Arabia, Kuwait, and the United Arab Emirates, and it is clearly unfavorable to Iran, as well as to countries with insufficient production capacity such as Iraq and Venezuela.
According to statistics from the International Energy Agency, Russia is one of the few non-OPEC oil producers that can increase production in the short term, with the exception of Saudi Arabia, Kuwait, and the United Arab Emirates. Russia therefore supports increased production.
Saudi Arabia and Russia said last month that they are ready to fill the gap in crude oil supply, stabilize the international crude oil market, and suggest increasing crude oil exports.
Biane Hildropp, an analyst at Scandinavia Bank of Sweden, said that Russia hopes to not continue the production cuts agreement and show its intention to increase its influence in the Middle East.
Reuters stated that since the establishment of OPEC in 1960, in spite of frequent differences among member states, it will eventually insist on harmonizing and harmonizing the oil policy. Even if war breaks out between some member states, OPEC’s common position will still be observed in terms of oil policy. OPEC members may therefore reach a compromise on the 22nd meeting.