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1 Jul, 2019 14:46

‘OPEC is going to die’: Iran says Saudi-Russian alliance could kill oil cartel

‘OPEC is going to die’: Iran says Saudi-Russian alliance could kill oil cartel

Tehran has warned that the deal between Saudi Arabia and non-OPEC member Russia to cap global crude production could kill the original OPEC alliance.

“I have no problem with a production cut. The main challenge to OPEC is unilateralism,” Iranian Oil Minister Bijan Zanganeh told reporters before the OPEC summit in Vienna on Monday.

During the weekend, Russian and Saudi Arabian leaders met on the sidelines of the G20 meeting in Osaka, Japan. After that, both Moscow and Riyadh signaled that they both support the extension of crude output cuts for another nine months.

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Iran advocates keeping the agreement for six or nine months, but the oil minister said that OPEC members need to discuss the matter together first, instead of “two people [deciding] outside OPEC” before their approval.

“This is the biggest threat to OPEC,” Zangeneh said. “Iran won’t leave OPEC but I believe OPEC is going to die. It’s going to die with these processes.”

It’s not the first time the Islamic Republic has criticized fellow oil cartel members. In May, the country’s oil minister warned that the bloc is on the brink of collapse due to “unilateralism.” Back then, he was believed to be referring to Saudi Arabia, as the kingdom said it could fill the gap in the market after the US announced the suspension of temporary sanctions waivers, in an attempt to cut off Iranian oil exports.

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OPEC and allied oil-producing majors led by Russia agreed in December to trim daily crude output by 1.2 million barrels to stabilize the oil market after prices crashed. Crude prices have jumped by a third since then, with global benchmarks going up nearly two percent on Monday on expectations of the extension of the deal.

Ministers of OPEC states gathered in Vienna on Monday to discuss the fate of the deal, before they are joined by ministers from non-OPEC countries on Tuesday.

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