Tension between Iran and Saudi Arabia is likely to hold OPEC back from achieving maximum oil production — which may indicate a rise in oil production for the oil organisation.
Analysts said that geopolitical complexities within the group could mean an immense rise in oil prices in the region. The rise is unlikely to affect major countries as the price of oil had turned down in the last few years due to excess supply from traditional producers and shale oil producers in the United States.
“The relations between Saudi Arabia and Iran are just so, so poor I can’t see any scenario under which Saudi Arabia would cut without Iran freezing and Iran has said so consistently that they just will not freeze until they reach pre-sanctions levels,” BMI Research ‘s oil and gas analyst, Emma Richards, told CNBC recently.
Fitch Group’s research arm BMI Research was not expecting an agreement on the production freeze at the informal meeting on the back of the conflicts within OPEC, with tensions between Saudi Arabia and Iran the “main impediment” to a deal, the house said in a recent report.
“We’re talking about a long-term i.e. 1,400-year chasm between the Sunni side and the Shia side. OPEC has only been around for 60 years so what we’re looking at now is the greatest chasm between the Sunni side of OPEC and the Shia side of OPEC,” Stephen Schork, Editor of the Schork report.