Iran Saudis Spar on Oil Prices

Iran is pushing for lower oil production to keep prices high as demand increases but slows

Aryeh Ben Hayim , | updated: 10:57 PM

OPEC Headquarters
OPEC Headquarters

Mohammad Aliabadi, a key Ahmadinijad ally and Iran's caretaker oil minister, said on Saturday that OPEC was opposed to any increase in output ceilings in the absence of "well-studied justifications," Gulf News reported.

"Iran's policy as head of OPEC is to maintain the production ceiling of this organisation," Mohammad Aliabadi was quoted as saying by the semi-official Mehr news agency. "It is a position a majority of OPEC members agree with."

But its the minority that may matter most. Iran's critical Persian Gulf rival Saudi Arabia is in favor of increasing output, probably with a view towards weakening Iran while accommodating a slowing, but still increasing demand for oil in industrialized countries.

At OPEC's Vienna meeting in June, its members failed to agree on output limits for the first time in at least 20 years.

Saudi Arabia together with Kuwait, Qatar (currently allied with the US in Libya) and the United Arab Emirates - all Gulf Cooperation Council members - favored increasing production quotas, but were blocked by Iran and Venezuela who feared a steep decline in prices in light of Barack Obama's decision to tap the United States' strategic oil reserves.