For all the geopolitical acrimony between the two countries, on the matter of OPEC oil production policy Saudi Arabia and Iran would appear aligned. Slumping prices and persistent builds in US oil inventories have Saudi Arabia calling for an extension to OPEC’s supply curbs, no doubt appeasing Iran, which has in no uncertain terms warned other producers to steer clear of its sanctions-encumbered market share.
But a dispute over OPEC’s meeting date threatens to undo any bonhomie, with just two and a half weeks left before the OPEC/non-OPEC 1.2 million b/d production cut accord is due to expire at month’s end. Originally scheduled for June 25-26, OPEC’s semi-annual gathering in Vienna could be moved to the week after, to accommodate a request by key non-OPEC ally Russia, which has cited a potential conflict with the G20 summit on June 28-29 in Japan.
Most of OPEC appears on board with the date shift, but Iran has said it is unavailable for an early-July meeting and that any changes must be unanimously agreed, according to several delegates. Russian energy minister Alexander Novak is expected to travel to Iran next week to take part in a Russian-Iranian intergovernmental commission, where he may hope to settle the scheduling spat.
One option being considered is to hold OPEC’s meeting as intended on June 25, with another meeting July 3 or 4 involving Russia and the nine other non-OPEC partners. Any delay “could complicate messaging and potentially create some additional volatility in oil markets,” said Joe McMonigle, an analyst with Hedgeye Capital.