War Of Words As Rivals Split OPEC Over Oil Output

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Ministers of the biggest oil-rich nations are involved in a war of words over production levels.

The ministers are meeting for a summit in Vienna to thrash out the details of a new agreement over how much oil each OPEC nation should pump out over the coming months.

But they cannot agree on a strategy.

Religion, trade and politics are clouding the discussions.

On one side are Saudi Arabia and Russia – the big two producers who want to ramp up production to fill the market share left by Iran and Venezuela, who both face sanctions from the US and other foreign powers that will limit their output.

Stirring the pot

Lining up against them are Iran, Iraq, Algeria and Venezuela, who desperately need oil dollars to fill their depleted foreign currency reserves and want to cap output to control supply and the price a barrel.

The disagreement runs deeper than money.

Saudi Arabia and Iraq are governed by rival Muslim factions and are embroiled in a covert war in Syria and Yemen. Both see the other as enemies and want to exert their influence over the rest of the Middle East.

The pot has been stirred further by US President Donald Trump and China calling for output to increase, which will probably lead to cheaper fuel, which would suit both industrial nations.

Strategy complaints

“Oil demand usually grows at the steepest pace in the third quarter. We could face a deficit if we don’t take measures,” said Russian Energy Minister Alexander Novak. “In our view, this could lead to market overheating.”

Russia wants OPEC to increase production by 1.5 million barrels a day, which would bring output levels back to those of 18 months ago. During that time, the price of a barrel of crude has soared from $27 to $75.

Iran and Iraq oppose the move, arguing Saudi Arabia and Russia are looking after personal interests, which is against the underlying principles of OPEC. They say the organisation should represent every nation even if the agreed strategy is detrimental to the bigger producers.

While talks continue behind closed doors to try and reach an agreement, the OPEC summit is due for the weekend.

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