Ahead of the 161st OPEC meeting Iran has branded cartel rival Saudi Arabia “violators” of the quota system.
OPEC representative Mohammad Ali Khatibi has officially protested to ther OPEC secretariat that Saudi Arabia is “saturating the market” under western pressure, according to the Iranian state news agency IRNA.
Iran is under severe budgetary pressure to seek higher oil prices, with a 2011 breakeven oil price of $115 a barrel, according to the latest IMF estimate, a figure which is set to increase as exports fall off under sanctions. Gulf OPEC producers all have breakeven prices below $100 a barrel.
Saudi Arabia pumped up to 10.1 million barrels a day recently in a bid to force prices down to a widely publicized target of $100 a barrel from a March high of $128, maintaining production at a level last seen over a decade ago.
The campaign included disclosure of huge reserves increases at Aramco storage sites and Oil Minister Ali Naimi taking the unusual step of writing a forceful column in the Financial Times.
OPEC has a current cartel-wide target of 30 million barrels per day, but is currently producing around 31.75 million according to Platts, chiefly due to a boost in production by Saudi Arabia, Kuwait and the UAE.
Iran has been incensed by Gulf producers filling the supply gap left by its sanctions-induced fall-off in exports and the willingness of Saudi Arabia to take extraordinary steps to neutralize the ‘fear premium’ attached to oil resulting from Tehran’s fractious negotiations with the West over its nuclear program.
“It is not right that two or three countries compensate for a country that is being sanctioned. OPEC members should not work against each other,” Khatibi said, according to IRNA.
With oil prices now hovering around $98 a barrel, Saudi Arabia has already begun to squeeze the spigots, cutting production by around 300,000 barrels a day, according to a Reuters report.
Venezuela has also chimed in in similar terms, according to an AP report.
The 161st OPEC meeting, where the oil production quota will be discussed and a successor to current Secretary General Abdalla El-Badri will be appointed, will take place on 14 June. Oil & Gas Middle East will be covering the event live on twitter and online.
