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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Commodities: Tensions in run-up to Opec quota meeting after Iran’s d

rocky
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Commodities: Tensions in run-up to Opec quota meeting after Iran’s d Empty Commodities: Tensions in run-up to Opec quota meeting after Iran’s d

Post by rocky Mon 02 Dec 2013, 3:54 am

Commodities: Tensions in run-up to Opec quota meeting after Iran’s deal with the West



Opec is one of the few forums where senior officials from opposing Middle East superpowers Iran and Saudi
By Andrew Critchlow

5:26PM GMT 01 Dec 2013

Vienna will this week see some of the oil industry’s most powerful decision-makers converge on the city when the Organisation of Petroleum Exporting Countries (Opec) convenes for its final quota-setting meeting of the year.

Opec gatherings can often appear like the plot of a James Bond film with an exotic cast that includes Venezuelan, Iranian, Saudi, Libyan and Iraqi oil men plotting around a table how to control the world’s energy supplies. In reality, these meetings, in recent years at least, have been far more mundane.

However, the script could change on Wednesday as ministers from the group’s 12 member nations, which control about a third of the world’s daily supply of 90m barrels of crude, discuss whether to change the quota that is officially intended to regulate how much oil each country can pump.

Normally, with Brent trading comfortably above $100 (£61) a barrel Opec members are happy enough to go along with the wishes of the group’s most influential voice, that of Saudi Arabia’s diminutive oil minister, Ali al-Naimi, and stick to their quotas.

Saudi, which has the capacity to open its spigots full bore and produce 12.5m barrels a day of oil, is considered the cartel’s swing producer. It has reigned unchallenged over the group in recent years, helped by sanctions that have prevented its major rival, Iran, from having any impact on world markets or oil policy. Since early 2012, when tougher sanctions on Iran first started to take their toll, output from the country’s fields has dropped to about 1m b/d, down from 2.5m b/d, which is equal to the loss of about $80bn in income.
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Saudi’s Sunni Muslim rulers are ideologically opposed to the Shia Mullahs who are the real power in Tehran. Opec is one of the few forums that exist where senior officials from the two opposing Middle East superpowers regularly sit face-to-face.

Tensions between the two have cranked up ahead of this week’s meeting, with Iran signing a nuclear deal with the western powers in Geneva. The agreement has been seen by some commentators as a further sign of Riyadh’s declining influence in the West, especially with Washington.

“There is always some tension in the air between Iran and the Saudis,” said Cornelia Meyer, an independent energy expert and chairman of MRL Corporation. “Venezuela and Iran are traditionally hawks wanting to see higher prices but the Saudis want to use their power to maintain the consensus.”

How to factor in the possibility of more supply coming on stream from Iran and more production from its Middle East neighbour Iraq could provide a tricky dilemma for the Saudis. As Iran isn’t bound by quotas at present due to sanctions, it may push hard with Venezuela for an overall production cut to help maintain prices above $100.

“There will be some discussion around what will happen if more Iranian oil comes into the market,” said Jason Schenker, economist and president at Prestige Economics. “But I don’t think we will see a change in quotas because prices are where Opec likes them to be.”

Added to the debate about production will be a decision over how to replace the long-standing Opec Secretary General Abdallah Salem El-Badri who is coming to the end of a year-long extension to his term in office.

Iran has put forward Gholam Hossein Nozarim, a conservative politician and former oil minister, as its candidate, while Saudi Arabia is proposing Majid al-Moneef, who is also a member of the country’s powerful Shura Council. A wildcard entry will be from Iraq, which has put forward Thamir Ghadban, its former oil minister in the immediate aftermath of the fall of Saddam Hussein in 2003.

“Opec secretary general is a high profile role that any country would like to have,” said Schenker. “The role is always contentious and I expect they will likely ask el-Badri to stay.”

Iran’s Opec representative had no comment to make on the internal politics.

http://www.telegraph.co.uk/finance/commodities/10486943/Tensions-in-run-up-to-Opec-quota-meeting-after-Irans-deal-with-the-West.html

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