OPEC Meeting Highlights Ongoing Iran-Saudi Discord

Later on Thursday, Maritime Executive corroborated that view, saying that Iran had maintained the same defiant tone during the meeting itself, which ran its course without leading to an agreement. The Saudis promised to not shock the market with any major increase in output, but they fell short of following through on plans to set a collective ceiling, owing to the fact that Iran would not agree to such a proposal.

Iranian Oil Minister Bijan Zanganeh instead insisted that the organization should set separate, individual quota for each member state. Such a system was rejected by OPEC years ago, according to Maritime Executive. And what’s more, the specific arrangement put forward by Zanganeh would have allowed Iran to raise its output by nearly a million more barrels per day, to levels well above the output that the Islamic Republic had achieved prior to the imposition of large-scale economic sanctions related to the country’s nuclear program.

Previously, Iranian officials had argued that they should be allowed to grow output at their own chosen pace, with an eye toward recovering from those sanctions. The same officials continued to reject imposed restrictions in the context of the OPEC meeting on Thursday, but they appeared to have moved the goal posts, relative to prior statements suggesting that they would consider cooperating with the oil cartel once pre-sanctions output had been reclaimed.

According to the Iranians themselves, this output of approximately four million barrels per day has already been achieved during the first few months after implementation of the Iran nuclear deal. Some independent analysts have corroborated those figures, though some have also suggested that the output increase is largely attributable to long-held stockpiles, which are now vanishing. In this context, Tehran may be hoping for larger short-term output to compensate for later shortfalls that would otherwise raise questions about the strength of the Iranian oil industry’s recovery.

The Iranian-Saudi contest of wills at the OPEC meeting may be seen by Iranian officials as an opportunity to project an image of both economic and political strength. Indeed, Tehran’s refusal to participate in an output freeze was matched by statements indicating broader opposition to Saudi requests and demands. Such recurring statements continue to undermine the expectation that the Saudis and Iranians may reconcile some of their differences.

Last week, the two sides met for a second attempt at resolving differences over the hajj pilgrimage, but that meeting ended as unsuccessfully as the previous one. Both sides came away from it blaming the other for intransigence, thus indicating that the political conflict between them was still running strong.

Along similar lines, Trend pointed out on Thursday that a Lebanese television news network had claimed that Tehran had recently received a Saudi mediator, implying that the Islamic Republic was open to resolving its differences with it regional adversary. Specifically, it was claimed that the meeting dealt with the Yemeni Civil War, where Iran backs the Houthi rebels and a Saudi-led coalition backs the country’s elected government. However, the Iranian Foreign Ministry responded to these reports by denying that any such meeting took place, suggesting either that the reports were erroneous or that Tehran does not want to appear as though it is wavering until such time as an agreement has been reached.

There have been many other indications that the two countries remain strongly at odds, not only over oil outputs and Yemen, but also over a range of other regional conflicts and issues, which the Saudis claim Tehran has been inappropriately involved in. Early this week, Iran led major offensives against the Islamic State militants in Iraq and Syria, leading to renewed discussions of where Iranian and Western interests in those conflicts aligned and diverged.

Riyadh has been a leading voice in arguing that Iranian involvement in the conflicts will only threaten to deepen the sectarian nature of the conflict, owing to its empowerment of Shiite militias, some of which have been accused of human rights violations matching those of the Islamic State. But Iran has responded defiantly to Saudi Arabia’s calls for an end to that Iranian involvement.