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Saudi Arabia turns oil weapon on Iran: Kemp

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But Iran maintained it would continue the increase in oil production it has followed since economic sanctions were lifted earlier this year.

They wanted a deal that would freeze output and help stem the plunge in crude prices over the past 18 months.

The U.S. has seen its shale-oil production skyrocket in recent years but over the last few months, U.S. shale output has generally been on the decline, with the U.S. government estimating oil output from seven domestic shale plays will decline by 114,000 barrels a day to 4.836 million barrels a day in May. The dispute underscores the level of discord inside OPEC as it faces arguably its biggest challenge since the oil glut of the 1980s.

Iranian OPEC Governor Hossein Kazempour Ardebilli was speaking to his oil ministry’s Shana news agency after talks on Sunday between producers in Doha collapsed when Saudi Arabia demanded that Iran join a freeze.

On Apr. 20, the price for June futures of the North Sea Brent oil mix decreased by 2.13 percent to $43.09 per barrel, while the price for June futures of the WTI oil decreased by 2.33 percent to $41.48 per barrel. They are hurting. Even Saudi Arabia – despite having significant financial buffers – is overhauling its public finances and trying to diversify its economy away from oil.

Malaysian Rating Corp Bhd Chief Economist, Nor Zahidi Alias, said the negative outcome from the meeting would naturally weighed on global oil price in the short term but the medium-term outlook remained positive. The uncertainty also hit share markets.

An oil and gas analyst from MIDF Research said the initial collective agreement between oil majors was a positive indicator for oil prices going forward regardless of the outcome of yesterday’s meeting.

It was not formally an Opec event, though most of the group’s members were represented.

The OPEC Reference Basket (ORB) is made up of the following oil brands: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Minas (Indonesia), Iran Heavy (Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela). “To a large extent, the Malaysian budget deficit hinges on oil prices although the dependency is getting less”, he said.

“Pressure is building up for the leading Persian Gulf swing producer, Saudi Arabia, to decide if it should increase production sharply to offset the US and Kuwait situations, and to possibly prevent Iran and Russian Federation from achieving any new market share gains”, said Richard Hastings, macro strategist at Seaport Global Securities.

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