OPEC fails to agree policy but Saudis pledge no shocks

Thu Jun 2, 2016 1:44pm EDT
 
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By Reem Shamseddine, Rania El Gamal and Alex Lawler

VIENNA (Reuters) - OPEC failed to agree a clear oil-output strategy on Thursday as Iran insisted on steeply raising its own production, though Tehran's arch-rival Saudi Arabia promised not to flood the market and sought to mend fences within the organization.

Tensions between the Sunni-led kingdom and the Shi'ite Islamic Republic had blighted several previous OPEC meetings, including in December 2015 when the group fell short of agreeing a formal output target for the first time in years.

Strains were less acute on Thursday, however, as new Saudi Energy Minister Khalid al-Falih showed Riyadh wanted to be more conciliatory and his Iranian peer Bijan Zanganeh kept his criticism of Riyadh to an unusual minimum.

In a rare compromise, OPEC also decided unanimously to appoint Nigeria's Mohammed Barkindo as its new secretary-general after years of friction over the issue.

Saudi Arabia and its Gulf allies had tried to propose OPEC set a new collective ceiling in an attempt to repair the group's waning importance. But Thursday's meeting ended with no new policy or ceiling amid resistance from Iran.

Despite the setback, Saudi Arabia moved to soothe market fears that failure to reach any deal would prompt OPEC's largest producer, already pumping near record highs, to raise production further to punish rivals and gain additional market share.

"We will be very gentle in our approach and make sure we don't shock the market in any way," Falih told reporters.

"There is no reason to expect that Saudi Arabia is going to go on a flooding campaign," Falih said when asked whether Saudi Arabia could accelerate production.   Continued...

 
The flow of drilling mud is seen in a container while an oilfield worker works on a drilling rig at an oil well operated by Venezuela's state oil company PDVSA, in the oil rich Orinoco belt, near Cabrutica at the state of Anzoategui April 16, 2015. REUTERS/Carlos Garcia Rawlins/File Photo