Monday, 25 June 2012

Iraq, Iran form OPEC alliance

There have been speculations that Iran and Iraq are forming a strategic alliance within OPEC. The Financial Times, reporting on the recent OPEC conference in Vienna, even suggested that Iran's allies inside the cartel are trying to win the support of other producers against EU sanctions on Iran's oil industry.

The bid, which was spearheaded by Venezuela, was eventually rejected by key producers such as Saudi Arabia, Nigeria, Libya, and Kuwait. Nevertheless, the issue clearly overshadowed the OPEC talks and was blamed for 'strong disagreements' between members on crucial issues such as production and prices. The

Financial Times quoted unnamed officials as saying that the disagreements showed it would be increasingly difficult to maintain neutrality inside OPEC, as the sanctions issue is reinforcing already deep divisions between Iran, Venezuela, and Algeria on the one side and Saudi Arabia, Kuwait, and the UAE on the other.

It has now become clear that Iraq has joined Iran's camp, whose members are accused of trying to politicise OPEC in favour of Tehran – a position that is expected to bode ill for the crucial cartel.

For more news and expert analysis about Iran, please see Iran Strategic Focus.

© 2012 Menas Associates

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