Sept. 21–Crude oil prices are hovering near their highest levels in more than two months ahead of a potentially contentious meeting between OPEC, Russia and other oil-producing nations.
At issue is Iran’s threat to veto any decisions as the increasingly isolated nation complains that the flourishing relationship between Saudi Arabia and Russia is beginning to overwhelm the Organization of the Petroleum Exporting Countries, and that both the Saudis and Russians are being influenced by pressure from the United States.
Iran is facing new sanctions from the United States that will cut into its oil exporting volumes, and the Saudis and Russians are essentially eating into Iran’s market share.
While there won’t be any formal policy changes, Sunday’s meeting in Algeria may lead the Russians and Saudis to tweak their oil production volumes up to try to keep Brent crude, the European benchmark, just below $80 a barrel, where it is currently hovering, said Jamie Webster, senior director at Boston Consulting Group’s Center for Energy Impact in Washington. The U.S. benchmark, West Texas Intermediate, is now above $70 per barrel.
President Donald Trump via Twitter has again warned OPEC against letting oil prices rise further — and push gasoline too high ahead of the midterm elections — and $80 a barrel appears to be his red line, Webster said.
“Iran is angry. Iran is justified. But Iran is weak,” Webster said. “When you’re weak, what can you do but yell and holler?”
Because of Russia’s oil strength and its new friendship with the Saudis, these OPEC committee meetings with Russia and other non-OPEC nations are starting to become nearly as important as the official OPEC meetings, he added.
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