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CAMELIA ENTEKHABIFARD
Even as late as the day before last week’s crucial OPEC ministerial meeting in Vienna, none of the experts were speculating that Iran and Saudi Arabia would surprise the world by reaching an agreement that once again revealed the power of the original cartel.
While oil prices were rising in the market, people such as Iran’s oil minister Bijan Namdar Zangeneh said the price increases were political, and a direct consequence of the US withdrawal from the Iran nuclear deal. But countries such as Saudi Arabia and Russia insisted the shortage in the market was due to production cuts by OPEC members.
In November 2016, OPEC members cut production in order to manage drastically decreasing oil prices. Iran was excluded from the cuts because of the time it needed to recover from the oil embargo that was lifted with the nuclear deal, but even non-OPEC members such as Russia agreed to cut production.
In the past year and half all the producers enjoyed steady oil prices and the market was also stable until May, when President Trump pulled out of the Iran deal and the market reacted sharply. Maybe the fear of returning sanctions and the possible shortage of crude in the absence of Iran’s production caused the rise in the price. However, it was the responsibility of OPEC to review the case and make a decision in the interests of both suppliers and consumers.
Iran complained that the market shortage was a ploy by Saudi Arabia to take Iran’s share as soon as the oil embargo was implemented by President Trump. But while Tehran pointed the finger at Saudi Arabia, here was Russia, a non-member of the cartel, aggressively campaigning for a production increase.
Russia, on whom Iran relies so much for friendship and support, from Syria to the nuclear deal, in fact acted more opportunistically by pushing the cartel for production increases. Russia’s national interest and the need for cash to boost its economy made this close ally of Tehran eager to fill the gap when Iran is pushed out of the market again, perhaps in November.
Saudi Arabia and Iran stood side by side, and proved that politics can take a back seat when it comes to serving the best interests of OPEC members.
Last week, at a meeting between the Saudi and Iranian oil ministers, both sides softened their approach, the cartel kept its unity and the market’s demands were served too. No one needs to cut production, the market gap will be filled by those with the capacity, and Saudi Arabia and Russia need to coordinate on how much to increase.
This agreement is an achievement by the two regional competitors, Iran and Saudi Arabia. It will remain at least until November, when OPEC members may adopt a different policy based on Trump’s decision about Iran. It shows the important role OPEC still can play, despite the political differences between some key members.
Saudi Arabia and Iran stood side by side, and proved that politics can take a back seat when it comes to serving the best interests of OPEC members. Iran even now has the opportunity to increase its production if it has customers and capacity, before Trump’s timetable to decide on Iran’s oil embargo in November.
We should congratulate the Iranian and Saudi oil ministers. Nevertheless, we know only too well that as long as the ayatollahs are running an ideological political system in Tehran, there will be no similar progress in matters of regional compliance. Perhaps the propaganda machine of the Islamic Republic will have a different narrative of the OPEC meeting for its people, portraying Russia as a savior of Iran.
• Camelia Entekhabifard is an Iranian-American journalist, political commentator and author of Camelia: Save Yourself By Telling the Truth (Seven Stories Press, 2008). Twitter: @CameliaFard
Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News’ point-of-view
