Iran and Allies Want to Cut OPEC Production by 1 Million
OPEC agreed to hold an emergency meeting coming Friday. Iran and its allies at OPEC, Oil Producing and Exporting countries, want to cut OPEC’s production by 1 million barrels per day, in order to prevent the prices of oil from falling even further than they have in recent weeks.
Last Friday, that is two days ago, one barrel of oil was less than $70. This while the price was twice as high only months ago.
The main reason for the drop was, of course, the economic crisis. When a crisis hits the United States, Americans will use less oil. Demand goes down, the prices of oil follow suit.
Since the crisis was not limited to the U.S., and has spread throughout the world, the prices fell even more, and are likely to continue their free fall until, well, until either OPEC cuts production or global economies recover.
Many OPEC members are highly dependent on oil revenues, and are not willing – perhaps not able – to wait until economies recover. Especially Iran, whose federal budget is for 80% covered by oil revenues, might be in trouble if prices continue to fall, which is why Tehran wants to convince OPEC to cut production.
The goal of Iran is to bring the prices up, and stabilize them at, $100 a barrel.
Venezuela agrees with Iran that production should be cut, but is willing to settle for $80-$90 a barrel, as is Qatar.
All, however, is dependent on Saudi Arabia: the largest producer of oil in the world, and the dominant force of OPEC.
The Saudis too are quite dependent on oil revenues, but less so than Iran. And, they have taken a dovish stance in this regard, due to their relative alliance with the United States and… their concern about Iran’s growing power.
Many often presume that since Wahabbis are in control of Saudi Arabia, the country’s main enemy has to be ‘the West.’ This is, however, not the case. Saudi Arabia’s main enemy is Iran; a radical Shiite country, and therefor the Saudis’ archenemy.
Keeping the prices of oil down hurts the Saudis… but it hurts the Iranians much more. The Kingdom, of course, knows this and does everything in its power to weaken Iran, hoping that the weaker Tehran is, the less influence they have in the region as a whole, and the less they will be able to spread extremist Shiite Islam in traditionally Sunni Muslim countries.
More here.
