Any OPEC Solidarity Break Seen by Iran Sending Oil Lower – Bloomberg.
Any break in OPEC solidarity or a price war will drive crude to below $50 or even $40 a barrel,Iran’s oil ministry head of petroleum market analysis said.
Middle East crude producers Saudi Arabia and Iraq this month increased the discounts used to set the official prices for their main crudes for buyers in Asia to the widest in more than a decade. Sellers want to defend market share as oil tumbled into a bear market amid a global glut exacerbated by the highest U.S. production in three decades. OPEC decided unanimously on Nov. 27 to maintain its output target, prompting a drop in benchmark Brent crude to less than $70 a barrel for the first time since May 2010.
“Any break in OPEC solidarity or price war will lead to an enormous price dive shock” that would push oil to $40 or $50, Mohammad Sadegh Memarian said at a conference in Dubai. The drop to less than $80 is already below market equilibrium, he said.
Crude prices have declined about 40 percent from a June peak amid overproduction and sluggish growth in consumption. Saudi Arabia led OPEC’s decision to maintain rather than cut output last month in Vienna, citing the threat U.S. shale presents to the group’s market share, Iranian Oil Minister Bijan Namdar Zanganeh said on Nov. 28. Financially-strapped OPEC members such as Iran and Venezuela had called for a cut.
…click on the above link to read the rest of the article…
