OPEC deal may falter in battle for influence

Saudi Arabia could back out of agreement to cut output

VIENNA— Up to this week, chances that OPEC countries would agree to their first cut in output in eight years were looking good. Now, not so much.

Saudi Arabia is questioning the informal agreement made in September. And the desert kingdom, which accounts for about a third of OPEC’s output, normally prevails at ministerial meetings. The price of crude was down on Tuesday, reflecting investors’ caution about a final agreement being reached.

Still, a deal is not out of the question, and even a remote possibility that it will be backed is an exciting prospect. Spencer Welch, an analyst with IHS energy, casts the event as “potentially the most important OPEC meeting since1973,” when the cartel imposed a highly effective oil embargo on the West.

Those days of OPEC unity have been replaced by infighting and ri- valries that have tarnished the cartel’s image and crippled its ability to set world prices and supplies.

Instead of cutbacks, Saudi oil minister Khalid Al-Falih says the Organization of the Petroleum Exporting Countries should do no more than what it has done for nearly a decade — sit back and let demand drive up prices “without an intervention from OPEC.”

He told reporters that the Vienna meeting is wide open, declaring: “We don’t have a single path, which is to cut production.”

The Saudi stance raises chances not only of yet another inconclusive meeting. It also refocuses the spotlight on the battle for influence between the Saudis and Iran.

Once second only to Saudi Arabia in production within OPEC, Iran chafed for years under sanctions that crimped its oil sales while watching its rival increase its output. With sanctions lifted this year as a result of a nuclear agreement, Iran is looking to regain its market share within OPEC while pushing the Saudis to give up gains it says were made while Tehran was sanctioned.

Al-Falih may be hoping that his ap- parent about-turn on output cuts will pressure Iran and other members to be more open to reducing their own production instead of waiting for the Saudis to go it alone.

But Iran insists the onus is on the Saudis. Iran’s oil minister, Bijan Zanganeh, says that a Saudi cut of around 1.5 million barrels a day plus reductions by non-OPEC oil exporters “can restore stability in the market.”

Iran’s semi-official Mehr news agency opted for tougher language, accusing the Saudis of waging a “fullblown psychological war” against other members.