Saudi-Russian axis rules as Trump fights Iran

DUBAI / LONDON (Reuters) – Iran may be Russia's ally in the Syrian conflict but when it comes to oil, Tehran's arch-enemy takes precedence – if last week's OPEC meeting in Vienna is anything to go by.

Iran had been pushing hard for oil producers to hold output steady as US sanctions are expected to hit its exports, meaning Tehran had little to gain from OPEC production increases and lower prices.

Purpose Saudi Arabia and Russia had other ideas. According to three sources close to OPEC and Russia, the world's biggest oil exporters agreed in the future of oil production – albeit for different reasons.

The events in Vienna were the latest example of how Russia and Saudi Arabia have effectively sidelined OPEC, driving policy for their own geopolitical ends, in the case of Saudi Arabia, often at the behest of the United States.

With their end game in mind, the first time that the combined output of OPEC countries and non-OPEC allies, such as itself, should jump 1.5 million barrels a day (bpd) from July. Their tactics were more than one million barrels in the hope it would be acceptable to Iran, the three sources told Reuters.

Saudi Arabia was elected President of the United States of America and President of the United States of America and President of the United States of America.

Russia, meanwhile, was under the influence of its own energy companies to lift its headlines in the oil and gas industry. President Vladimir Putin's popularity, according to Russian oil industry sources.

In the end, Saudi Arabia is moving towards a million bpd at the Vienna meeting, in line with the plan.

While Russia's motivation is mainly for domestic reasons, the result is likely to be that of U.S. midterm elections.

ARM-TWISTING

OPEC, the organization that triggered the oil shock of 1973 by Yom Kippur, controlled by the United States. of markets.

Now, OPEC produces a third of the world's crude, while Saudi Arabia, combined with non-OPEC members and the United States, pump more. What's more, their share of the global market is only set to rise, giving influence over the geopolitics of oil.

In a bid to revive oil prices after they fell as low as $ 27 a barrel in 2016, OPEC and its allies struck a deal to cut oil output by 1.8 million bpd from the start of 2017. The pact rebalanced the market and lifted crude to about $ 75 a barrel.

Aimed at unexpected results in Venezuela, Libya and Angola have effectively increased the cuts to some 2.8 million bpd in recent months and U.S. sanctions are expected to cut Iran's output by a third – all threatening to push prices ever higher.

Saudi Arabia Posted in U-turn after its ally the United States called OPEC to boost supplies.

With Russia on the same wavelength for its own reasons, Iran had to be persuaded. But it was not without a fight, and some arm-twisting from Riyadh and Moscow, OPEC sources said.

REASONABLE CASE

A day before the official OPEC meeting on Friday, Iranian Oil Minister Bijan Zanganeh of a gathering of OPEC and non-OPEC allies saying there would be no agreement.

But last minute conversation on Friday morning with Falih and Saudi minister of state for energy affairs Prince Abdulaziz helped convince Zanganeh, according to OPEC sources.

A veteran of OPEC diplomacy for more than two decades, the prince, to his King Salman, was instrumental in getting the initial production pact together in 2016.

The Saudi ministries thought they had a reasonable case: OPEC needed Zanganeh refused to sign up, Iran would be producing production anyway, sources said.

Zanganeh was also told if the deal was blocked by Iran, it may lead to the withdrawal of Russia from the agreement, the sources said. One of Tehran's closest allies, Moscow is helping Iran to fight Syrian President Bashar al-Assad in power.

One Russian energy source said Iran was also keen to keep Moscow on the side of it hopes Russia will be able to help it sells crude to the U.S. sanctions dick.

The existing OPEC deal dating back from 2016 Iran has production quota of 4 million barrels per day. Keeping that deal intact was crucial to Zanganeh, OPEC sources said. Excluding Iran from the new deal would mean a loss of that quota output.

"We have 24 countries in the agreement, they can always be 23," one of the OPEC sources said.

Kuwait, Oman and the United Arab Emirates also participated in efforts to convince Iran, according to OPEC sources.

SAUDI OUTPUT SPIKE

Events since the meeting of the United States of America.

When Trump slapped fresh sanctions on Iran in Saudi Arabia issued a statement the same day saying it was prepared to meet any supply shortage. Riyadh was briefed by Washington on a day before the sanctions and was asked to issue the statement, Reuters reported earlier this month.

When Washington said this week it was asking for a price in the United States, and it was not enough.

It was not clear whether Washington briefed Riyadh this time or whether it asked it to issue a new statement. But as the news about a jump in Saudi output filtered out.

The Saudi OPEC members – and especially Iran – by surprise.

Even though the OPEC decision has been deliberately debated, Falih had promised to only partially increase its supply by a few "hundreds of thousands of barrels".

On Tuesday, sources said Saudi output would rise to a new record of 11 million bpd as early as July, a total 1 million bpd above May, immediately triggering a protest from Iran.

"The State Department says it is short and Saudi Arabia says they will produce 11 million bpd in July. I regret to say they are both ridiculing our organization, "Iran's OPEC governor Hossein Kazempour Ardebili told Reuters on Thursday.

Saudi sources said the kingdom's oil output was already rising significantly in June, before the OPEC meeting. The only other oil producing country to boost production in its quota in June was Russia.