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03 March 2024

Venezuela, Iran plea for oil cut hits Gulf Opec brick wall

Brent crude traded around $49.81 a barrel on Monday. (Reuters)

By Reuters

A diplomatic push by Venezuela and Iran for an Opec oil output cut has failed to soften the refusal of the group's Gulf members to do so for now, delegates said on Monday.

An oil price sinking to almost $48 a barrel on Monday is twisting the knife in Venezuela's steadily shrinking economy and in sanctions-bound Iran.

Venezuelan President Nicolas Maduro on Sunday met Saudi Arabia's Crown Prince Salman in Riyadh before heading to Qatar and Algeria on a tour to discuss the oil price crisis.

Iran's supreme leader Ayatollah Ali Khamenei also weighed in and told Venezuela's president on Saturday he backed coordinated action between Tehran and Caracas to reverse the more than 50 percent drop in crude since June 2014.

But the Gulf members of the Organization of the Petroleum Exporting Countries, who account for more than half of the 12-member group's output, are holding to their stance from Opec's November meeting in Vienna.

"There's a push from Venezuela for a cut, this is what they argued in Vienna and this is what they are lobbying for now. But from what I see there is no sign of cutting production from the Gulf states," a Gulf Opec delegate said.

"The only solution is to have the market absorb this surplus and the extent of that will be assessed by Opec by ministers during their meeting in June."

Another delegate said: "You need to give it some time to see the effect on prices. I think the Saudi oil minister was very clear on that."

During Maduro's visit to Saudi Arabia, it was agreed that a high-level commission between the two countries would meet every four months to review the market, a diplomatic source said.

The source added that during Maduro's meeting in Qatar, concern was expressed about prices but Qatar made no promises or commitments as to what action should be taken.

Maduro said from Qatar he would travel to more oil-producing nations in a bid to rally support.

"We're building a new consensus for this new situation in the oil market, for the stabilization of the market and prices," he said.

Opec holds its next scheduled meeting in June and Opec sources say there has been no suggestion that it gather before then.

Saudi Arabia is unwilling to shoulder any output cut unilaterally and any cut has to be a collective one by all Opec members, the sources said.