Saudi Arabia faced resistance from Iran to proposals to restore a production target scrapped at OPEC’s last meeting in December as persistent divisions within the producer group undermined efforts to build unity.
Still, OPEC’s arch rivals adopted a more conciliatory tone in Vienna than in the past, with Riyadh promising not to flood the market and Tehran saying it was ready to listen to its counterpart. The diplomatic maneuvering is an attempt to mend divisions that had grown so wide many dubbed OPEC as good as dead and preserve the rebound in oil prices to about $50 a barrel.
“We will be very gentle in our approach, so we don’t shock the market in any way,” Saudi Arabia’s new oil minister, Khalid Al-Falih, said before he sat down with his counterparts in Vienna on Thursday. “We are satisfied with the price movement over the last few months and think it will continue to gently edge up without much intervention, assuming that more or less OPEC production stays where it is.”
The differences between Saudi Arabia and Iran echo the demise of a proposal to freeze production in April. Saudi Arabia made that deal contingent on the participation of Iran, which has insisted on its right to boost crude output to pre-sanctions levels. Kuwait also questioned the need for a production target, even as higher oil prices ease tensions within the group.
“A general quota for OPEC with no country quotas has no meaning,” Iranian Oil Minister Bijan Namdar Zanganeh said Thursday. “It’s not possible to control or supervise, and what it means is that anyone can do whatever they like and just say that it’s within the share.”
Zanganeh said a country-quota system might be difficult to achieve at today’s gathering.