OPEC Divided on the Right Price for Oil
Major oil producers are clashing over how to fine tune the price of oil, amid fears of provoking an avalanche of U.S. crude output, write the Wall Street Journal’s Benoit Faucon and Summer Said.
The Organization of the Petroleum Exporting Countries is breaking into two camps after more than a year of unity on the necessity to curtail a global oil surplus and prop up oil prices.
On one side is Saudi Arabia, which wants oil prices at $70 a barrel or higher, and on the other is Iran, which wants them around $60.
The split is driven by differing views over whether $70 a barrel would send U.S. shale companies into a production frenzy that could cause prices to crash.
Iran wants OPEC to work to keep oil prices around $60 a barrel to contain shale producers, Oil Minister Bijan Zanganeh told The Wall Street Journal in a rare interview.
“If the price jumps [to] around $70…it will motivate more production in shale oil in the United States,” he said.
Meanwhile, Saudi Arabia has played down shale’s ability to upset the market.
Saudi Arabia and Iran are also at odds politically. They have backed different sides in the Syrian civil war, the Saudis have lobbied for tighter sanctions on Tehran, and Riyadh accuses Iran of funding and arming Yemeni rebels.
Still, Mr. Zanganeh said OPEC could agree in June to begin easing current production limits in 2019. The Saudis have expressed openness to that idea.
Meanwhile, oil prices fell Monday, weighed down by concerns about a rapid rise in U.S. crude output as cracks emerged in OPEC's united front on output cuts.
Brent crude, the global oil benchmark, fell 0.53% to $65.11 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.55% at $61.70 a barrel.
From WSJ Energy Journal this AM
