Saudi Arabia and Iran have long been competing within OPEC. However, the situation may change and the two countries may find themselves in the same boat.
Last year, Saudi Arabia decided that OPEC should keep its crude output limit unchanged in response to an increase in shale oil production in the United States. Back then, Iran opposed the idea and called for a cut in production to boost prices. Iran still holds on to its viewpoint, but after sanctions are lifted and crude exports rise, the country will uphold the Saudi Arabian decision.
Mike Wittner, head of research at Societe Generale SA in New York said: “Iran’s return is effectively the Saudi policy on steroids. The policy is that low-cost Middle East crude should be gaining market share, and that it’s shale and other expensive non-OPEC supply that should be cut.”
Economists predict that OPEC will stand pat on its crude oil output policy at the meeting in Vienna on December 4. Commerzbank AG supposes that Iran’s return to the crude oil market will boost Saudi Arabia’s confidence in its decision to maintain production volume struggling for the market share.
CitiGroup Inc believes that Iran’s resurgence will increase competition between the cartel’s members. Iran intends to rekindle its own crude industry and secure a market share.
