OPEC calls for unity among producers, as US sanctions Iran

OPEC calls for unity among producers, as US sanctions Iran
Oil cartel OPEC has called on producers to show unity, amid US sanctions on Iran.
2 min read
18 September, 2018
OPEC chief Mohammed Barkindo called for unity on Tuesday [Getty]

OPEC's head called for unity among producers on Tuesday as key member Iran faces tough sanctions from Iran, which will likely affect its ability to export oil.

Secretary General Mohammed Sanusi Barkindo spoke about the need for OPEC members to stand together amid regional and international divisions.

Speaking at the Gulf Intelligence Energy Markets Forum in Fujairah, UAE, he reminded attendees of an agreement between countries in the cartel and non-OPEC members to rescue oil prices in 2016, which dipped below $30 a barrel.

Barkindo praised the agreement, saying the cartel should work to make it permanent.

"The declaration of cooperation has come to stay," he said.

But he faces divisions within the cartel, particularly between Saudi Arabia and Iran, which are fighting a number of wars via proxies in the region.

Barkindo is attempting to quell Iran's anger - one of the cartel's top producers and founding members - due to crippling sanctions it faces from the US, after Washington pulled out of a landmark nuclear deal between Tehran and world powers in May.

Although some sanctions have already started on Iran, more punishing penalties will resume in early November with Asian countries already limiting their purchases of Iranian crude.

The US has asked Russia and Saudi Arabia to make up the difference, with indications that Riyadh will increase production to stabilise supplies.

"Mr. Trump's attempt to prevent Iran from appearing on the global crude oil markets has allowed Russia and Saudi Arabia, which would not favor low prices, to pursue hostage-taking policies in the market," Iranian OPEC governor Hossein Kazempour Ardebili said on Saturday.

Barkindo urged OPEC members to protect Iran, but offered no specifics on how this could be achieved.

"Iran is not only a founding member of OPEC, it's a very important member of this organisation. We have no choice but continue to work with all parties," Barkindo said.

Benchmark Brent crude has risen to nearly $80 a barrel and analysts believe it may go even higher if production remains low, and Iran is pushed out of the market by the new sanctions.

President Donald Trump is eager for oil production to increase - particularly with mid-term elections coming - with a gallon of regular gasoline costs on average $2.85 in the US, up from $2.62 a year ago, according to AAA.