From the Houston Chronicle
Iran’s Minister of Petroleum Bijan Namdar Zangeneh spoke to journalists at a hotel in Vienna, Austria, Tuesday, saying Iran wants to leave OPEC production caps in place.
The Texas oil boom and the higher crude prices that have driven it could take hits after OPEC meets in Vienna Friday, as the strengthening alliance between Saudi Arabia and Russia pushes the cartel to lift production caps and increase output.
The Saudis are seeking to undo, or at least relax, an agreement reached in late 2016 between the Organization of the Petroleum Exporting Countries, Russia and other major producer to curb production by a combined 1.8 million barrels a day, in an effort to drain a worldwide oil glut and lift prices. The strategy has largely worked and now Saudi Arabia, which bore the brunt of the production cuts, is looking to cash in on the higher prices it helped create.
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But Friday’s meeting threatens to be contentious as other OPEC nations, including Iran, Iraq and Venezuela, oppose any production increases, worried about replenishing the dwindling oil glut and undercutting prices. The Iranian oil minister, Bijan Namdar Zanganeh, vowed Tuesday to reject any compromise that would increase output.
On Wednesday, the US Energy Information Administration released a report showing oil inventories in the US fell by 1.1 million barrels last week to about 428 million barrels. Elsewhere, Saudi Arabia has been hinting the OPEC could extend production caps into next year. The country — OPEC’s biggest producer — is targeting a crude price of $80 or even $100, Reuters reported.
What happens in Vienna is, of course, critical to the energy industry in Houston, Texas and the United States, which has benefited immensely from OPEC’s success in lifting crude prices. Since the OPEC accord was reached, the United States, led by West Texas’ Permian Basin, has driven the growth in global oil production, increasing daily output by nearly 25 percent to a record 10.9 million barrels a day, surpassing Saudi Arabia as the world’s second-biggest oil producer, and closing in on the leader, Russia.
The Saudi-Russian partnership is a direct result of shale drilling boom here, analysts said, as both countries look to counter surging production in the United States and hold onto market share.
“The U.S. is the big scary beast that continues to be a burr in their saddle,” said Ian Nieboer, director and analyst with the RS Energy Group, a data and research firm.
