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Iranian oil minister says OPEC strains solvable

28 June 2011 01:16 (UTC +04:00)

Baku-APA. Iran’s oil minister has acknowledged strains within OPEC after its last meeting exposed deep rifts between his country and rival Saudi Arabia, but said the organization can solve them internally, APA reports quoting news.yahoo.com website.

Monday’s comments by Mohammad Aliabadi and other OPEC officials appeared to be an attempt to patch up the image of the 12-nation oil producing organization after it ended an abortive June 6 meeting split into two camps â€” one led by Iran, the other by the Saudis. Iran, which holds the OPEC rotating presidency, wanted to keep output steady and supplies tight. The Saudis sought a decision to increase levels â€” and they and their Gulf allies have since moved to boost production by themselves, shattering the image of OPEC unity.

The unprecedented rift appeared in part to be political between the two Middle East rivals. But both Aliabadi and other OPEC officials sought Monday to play down any differences at a briefing at the end of annual OPEC and EU talks meant to find common ground on production and prices.

OPEC member countries may "have differences," Aliabadi told reporters. "OPEC, however, ... is a family and solves its problems within the family."

Sunni-ruled Saudi Arabia has long vied with Shiite-rule Iran for regional dominance and the two have often been at loggerheads over pricing. In the past, however, OPEC, usually fell in behind Saudi Arabia, which produces the lion’s share of OPEC output.

Tensions have recently been exacerbated by an invitation from Bahrain’s Sunni rulers for a Saudi-led Gulf force to help suppress unrest by Bahrain’s Shiite population, infuriating Iran.

Sunni-dominated Arab countries, in turn, fear gains by Bahrain’s Shiites could allow Iran to expand its influence.

While both countries have been careful in the past to keep their rivalries out of public view, the Mideast unrest has sharpened tensions â€” with OPEC caught in the middle.

In comments first reported by the Wall Street Journal, Saudi Prince Turki al-Faisal suggested this month that countries could use oil policy to hobble Iran. "Iran is very vulnerable in the oil sector, and it is there that more could be done to squeeze the current government," Turki, Riyadh’s former ambassador to Washington and London, was quoted as telling U.S. and British servicemen at an air base outside London.

Saudi Arabia could easily make up for any reduction of Iranian oil exports, due to sanctions or other measures enacted to pressure Iran over its nuclear program, Turki was quoted as saying, adding that Riyadh has enough spare production capacity to "instantly replace all of Iran’s oil production."

Aliabadi said Monday he could not comment on Turki’s reported comments. But OPEC Secretary-General Abdullah Al-Badri said the OPEC rift that doomed the June 6 meeting reflected a difference of views over production and "has nothing to do with political" issues.

Both officials were critical of the decision by industrialized countries to start releasing 60 million barrels of oil from emergency supplies after OPEC failed to agree to up output levels.

"The stocks are supposed to be for emergencies only and not for commercial activities," Al-Badri said, suggesting the move was an attempt to influence markets at a time when stocks were plentiful and prices reasonable.

Aliabadi said that OPEC is capable of meeting market requirements. "We believe that the IEA ... should not intervene commercially," he said, referring to the Paris-based International Energy Agency, which coordinated the oil release. In announcing the move Thursday, the agency said it was pre-emptive to prevent a sudden spike in prices.

Even before the oil release, oil prices tumbled from highs of more than $100 a barrel, with the Saudi-led production increases easing concerns about supply. They fell further after the IEA announced that it will put the extra barrels on the market over a 30-day period, with half coming from the U.S. Strategic Petroleum Reserve.