Saudis take oil consumers’ side as OPEC nears pivotal meeting
A day before a pivotal meeting, Saudi Arabia urged OPEC to help consumers by boosting oil supply as opposition from archrival Iran showed signs of wavering.
“The most important thing is the consumers,” Saudi Energy Minister Khalid Al-Falih said Thursday. “We’re not going to allow a shortage to materialize to the point that markets will be squeezed and consumers will be hurt.”
The intensive negotiations between ministers in Vienna this week are the culmination of a process that has whipsawed oil markets for weeks. Saudi Arabia’s and Russia’s desire to roll back production cuts has encountered fierce opposition from Iran and Venezuela, while U.S. President Donald Trump has lobbed the occasional rhetorical bomb at the cartel on behalf of consumers.
The odds of the Organization of Petroleum Exporting Countries reaching a deal on Friday have increased through the week. Iran has edged away from a threat to veto any agreement that would raise output, while Saudi Arabia has put forward a plan that would add 600,000 barrels a day — about 0.5 percent of global supply — smaller than the 1.5 million increase Russia proposed.
If the Saudi position prevails, it would allow OPEC and its allies to partially offset the impact of the collapse in Venezuela’s oil industry and feed fastgrowing demand — two factors that played a big part in Brent crude’s surge to above $80 last month.
“The voice of the consumer is being heard in Vienna,” Daniel Yergin, vice chairman of consultant IHS Markit Ltd., said in a Bloomberg television interview. “That consumer could be one in the United States, but it’s also India, it’s China, and even Russian consumers.”
‘We are making good progress’
After a day of diplomatic back-and-forth, ministers were increasingly positive on Thursday that a deal was within reach.
“We are making good progress,” said United Arab Emirates Energy Minister Suhail Al Mazrouei, who also currently holds the position of OPEC president. “This is a very good meeting. We are optimistic.”
He was echoing comments from his Iranian counterpart, Bijan Namdar Zanganeh, who had rejected any production increase when he arrived in Vienna on Tuesday, saying OPEC shouldn’t be doing Trump’s bidding. After sitting down with several counterparts and speaking to Russian Energy Minister Alexander Novak by phone on Wednesday, the minister softened his tone considerably, saying he was optimistic about the outcome of the meeting.