Iran is reminding the world that the organization, OPEC is dead. To support this view just look at the over supply of OIL produced by the US, Russia and Saudi Arabia – these three countries can now supply the planet with 40 percent of its needs. All three are producing more and countries like Iran, ones that are at odds with Saudi Arabia and the US – although they are friendly with Russia – do have problems selling their product.
There is also, a further point to consider, the Iranians are developing nuclear weapons at an alarming pace. This makes Kuwait, Iraq, Saudi Arabia, and about a dozen other countries in the region nervous, feeling that a nuclear Iran (with a very different form of Islam and one that wants to control the region), will be out of control in the future. The evidence clearly shows that Iran is moving to be the key player in the region.
Our View: Iranian Oil Minister Bijan Zanganeh believes “unilateralism” which is now rising among some of the key OPEC members could ultimately lead to the break-up of OPEC. But in our view, OPEC started in fighting 10 years ago and despite putting caps on the amount that each nation produces, many of the members cheated. Our view is that these countries are battling budget shortfalls and need to sell as much crude oil as possible because they are spending billions of dollars on social welfare to ensure that their people do not rise up – they need to avoid another Arab Spring.
The Saudis, the US and Russia have acted – Saudi Arabia being the only OPEC member of the three – on their own with regards to oil production. Other countries like Iraq, Lybia and Nigeria have had relationships with the US that are complex. And of course Venezuela, a member of OPEC that is, like Libya nearing a failed state will not be true to the rules set by the OPEC group as it is desperate to get new equipment – from Russia – and trade its oil on the open market. OPEC started collapsing a decade ago.