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OPEC - no fit the notion of modern economy

OPEC - no fit the notion of modern economy

Date: 7 January 2016 16:32

Baku, Azerbaijan, Jan. 7

By Aygun Badalova - Trend:

Any coordination within OPEC is highly unlikely amid the tensions between Iran and Saudi Arabia, Sam Barden, the director of Wimpole International, an energy market development company believes.

“OPEC has no future what so ever. It does not fit the notion of a modern economy, and given current tensions between Iran and Saudi Arabia the likely hope of any coordination is zero,” Barden told Trend.

Over the past few days, the relations between Iran and Saudi Arabia deteriorated following the kingdom’s execution of a prominent Shia cleric Nimr al-Nimr on Jan. 2.

Reacting to al-Nimr’s execution, a group of hardline Iranians stormed Saudi embassy in Tehran, smashing furniture and setting fire to the building before being dispersed by police. Officially, Iran expressed strong protest regarding the execution, and the fragile relations between the two countries started going even further downhill from there.

Saudi Arabia and its allies including Sudan, Djibouti, Bahrain and the UAE joined diplomatic action against Iran following the break into the embassy in Tehran.

Barden believes, that the Saudi Arabia-Iran tensions are nothing more than a side show from an increasingly desperate Saudi regime unable or unwilling to modernise.

“Saudi regime is close to collapse and they have lost any notion of support from the world population generally. This is tragic for Saudi people, who are highly educated and have the ability collectively to modernise the Saudi economy,” Barden said.

“This will never happen under the current rulers as they are too busy fighting each other and wasting the national savings through lack of structural investment,” he added.

With regard to Iran, Barden believes that the country absolutely must establish a regional pricing hub for its hydrocarbons independent of London (Brent) and New York (WTI) in order to modernise its economy.

Both Saudi Arabia and Iran are the members of OPEC.

Saudi Arabia, by producing 10.25 million barrels per day of oil in the third quarter of 2015, ranks first among OPEC member countries in terms of crude production. The country was the one who pushed OPEC's strategy shift last year to defend market share rather than cut output to support prices, which have already decreased to their 11-years low.

Earlier the country rejected Iran's demand for cooperation on quota coordination by saying that the market can absorb Iran's surplus production and OPEC members do not need to reduce their output.

OPEC's crude oil production increased to 31.5 million barrels per day during last two years, 1.5 million barrels per day more than the determined 30 million barrels per day.

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