Tags: opec | oil | iran | saudi arabia | russia

Inside OPEC, Iran Is Being Marginalized

Inside OPEC, Iran Is Being Marginalized
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Thursday, 20 June 2019 05:02 PM Current | Bio | Archive

All eyes and ears have been on the Persian Gulf, Straits of Hormuz and Sea of Oman as tensions between Iran and the United States continue to mount. But there is another battle taking place, a battle which needs our attention and monitoring.

It is the battle brewing in OPEC between Iran and Saudi Arabia. The battle is massive, the battle's roots are basic and simple. The issue at stake is the date of the next OPEC meeting.

Originally, the meeting was scheduled for June 25 and 26, the same time as the G-20 meeting.

Because of recent events and the role of Iran in the rise of tensions in the Middle East, Russia, a non-OPEC member, together with Saudi Arabia, a full-fledged OPEC member, proposed delaying the meeting one week until July 1 and July 2. July 1 would be the day all 14 traditional OPEC members met and on July 2 the gathering would include non-OPEC members like Russia.

Over the past few years Russia has exercised much more influence in OPEC than most other countries, including member nations, except for Saudi Arabia. Russia's role is increasing while Iran's role is decreasing. It's like a seesaw. Once upon a time, Iran was a powerhouse in OPEC, always baiting and challenging Saudi Arabia. Iran was powerful, even as recently as last year.

In 2018 Iran was pumping and selling 2.5 million barrels of oil per day. Today, because of successful U.S. sanctions, Iran is pumping a mere 500,000 barrels per day. By contrast, today Saudi Arabia and Russia combined, those two countries alone, account for over 40% of the total output of OPEC. That is significant.

No matter when the meeting is held, the agenda of the OPEC meeting in OPEC's Vienna headquarters is clear. OPEC intends to extend the already agreed upon oil output cap. The deadline for that agreement expires at the end of June. Member nations and other participating nations will discuss continuing on with the cap and thereby limiting the amount of oil that floods into the market.

This is the opposite of what Iran wants. Iran wants and needs all limits to be removed. That way the Iranians can sell as much oil as they can to whichever countries they can. Iran needs the cash, they don't need limits. Iranian leadership was livid when the original cap was put into place and they have been counting the days and months until the agreement expires.

In OPEC as in many other matters in the Middle East, Saudi Arabia and Russia set the tone. Iran is marginalized and they do not like being in that position. They are not alone. Venezuela has also dropped to nearly the same status as Iran in the OPEC pecking order. Their internal economic and political conflicts have naturally moved them onto the sidelines of OPEC.

Iran is not taking their new status well.

Russia is worried about the international market. They are worried about stability in the region. Above all, Russia is worried about the unpredictability of Iran.

Saudi Arabia is worried about Shiite Iran attacking Sunni targets in the region. Unlike in the West, where access to and availability of fossil fuels and energy are replete with ups and downs and played like a game, the Saudis and Iran are locked into an ageless, internal, Muslim conflict dating back to the period just after the death of Mohammed. The history of OPEC is the history of a series of conflicts between Saudi Arabia and Iran.

Until now setting OPEC meeting dates was always very simple. Dates were announced and agreed upon. But this year, Russia is correct in wanting to move the meeting's date.

The G-20 is composed of the most developed countries in the world. Those countries combined are responsible for 90% of the Global World Product (GWP). Because of important and pivotal role they play in the world economy, every single member of the G20 is invested in regional stability and the price of oil. At their meeting the G-20 is going to focus on a long list of issues, but instability in the oil industry and Iran will be front and center.

It will be smarter, easier, more effective and more practical for OPEC et al. to make informed decisions if they meet after the G-20, not before.

Iran is not backing away from this battle. Russia is seen by Iran as a potential ally, so rather than battling an ally, Iran is concentrating all their venom and energy on their natural enemy, Saudi Arabia.

Time is passing quickly. Expect fireworks.

Micah Halpern is a political and foreign affairs commentator. He founded "The Micah Report" and hosts "Thinking Out Loud with Micah Halpern" a weekly TV program and "My Chopp" a daily radio spot. A dynamic speaker, he specializes in analyzing world events and evaluating their relevance and impact. Follow him on Twitter @MicahHalpern. To read more of this reports — Click Here Now.

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All eyes and ears have been on the Persian Gulf, Straits of Hormuz and Sea of Oman as tensions between Iran and the United States continue to mount. But there is another battle taking place, a battle which needs our attention and monitoring.
opec, oil, iran, saudi arabia, russia
829
2019-02-20
Thursday, 20 June 2019 05:02 PM
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