OPEC and its allies are unlikely to agree to an official increase in crude output when they meet in Algeria this weekend, although pressure is mounting on top producers to prevent a spike in oil prices ahead of new U.S. sanctions on Iran, OPEC sources said.
OPEC kingpin Saudi Arabia is worried that any sanctions-related spike in oil prices will trigger fresh criticism from U.S. President Donald Trump but is concerned about a lack of spare oil capacity to offset shortages, the sources said.
The kingdom is caught between a rock and a hard place, seeking to prevent prices from rising far above $80 per barrel ahead of U.S. congressional elections while fending off doubts over its ability to compensate for a drop in Iranian supply.
“It’s complicated. Saudi Arabia has to balance oil supply and demand, and it has to balance oil prices so they don’t rise too much before the U.S. elections,” one OPEC source said. “It’s also political because the Saudis don’t want to pump too much oil then the Iranians complain to OPEC that it [Saudi Arabia] is taking [Iran’s] market share. They also don’t want oil prices to fall too much.”
Trump took aim at OPEC on Sept. 20, writing on Twitter: “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!”
Under pressure from the U.S. president, OPEC, Russia and other allies agreed in June to boost production by 1 million barrels per day, having participated in a supply-cutting deal since 2017.
The so-called “OPEC+” coalition meets on Sept. 23 in Algeria to discuss how to allocate that increase of 1 million barrel per day (MMbbl/d) within its quota framework.