As a panel of OPEC and Russian ministers is meeting this weekend in Saudi Arabian city of Jeddah to assess oil market conditions ahead of the full OPEC+ meeting in Vienna next month, the heightened U.S.-Iran tension and concerns about oil supply security in the Middle East will be topics in bilateral meetings, a delegate told S&P Global Platts.
Two pumping stations along Aramco’s East-West oil pipeline in Saudi Arabia were attacked by explosive-laden drones in the early morning local time on Tuesday, the official Saudi Press Agency (SPA) reported, citing Saudi Energy Minister Khalid al-Falih, who described the attack as one of “terrorism and sabotage.”
Reports of the drone attack on Saudi Aramco’s oil infrastructure came a day after Saudi Arabia said that two of its oil tankers were attacked by saboteurs near the United Arab Emirates (UAE), while the UAE said that a total of four vessels were attacked off its coast at the port of Fujairah.
Days after these incidents, Jeddah will host a regular meeting of the Joint Ministerial Monitoring Committee (JMMC) on May 19, which is co-chaired by the leaders of the OPEC and non-OPEC group of nations part of the production cut deal, Saudi Arabia and Russia, respectively.
Those meetings generally discuss the state of the oil market and review compliance with the cuts, but the recent flare-up of tensions in the Middle East and attacks and sabotages on oil infrastructure and tankers are likely to be discussed.
Iran doesn’t sit on the JMMC, but Venezuela—an Iranian ally in OPEC against the U.S. sanctions—is part of that committee.
“The next OPEC meeting is…going to be very complicated as we don’t see how Iran and Venezuela will vote in favor of a supply increase by Saudi Arabia and the UAE in order to replace their restricted exports due to US sanctions,” Olivier Jakob, an analyst with consultancy Petromatrix, told S&P Global Platts’ Herman Wang.
While Saudi Arabia has not yet rushed to pump more to offset the expected loss of Iranian barrels, Iran warned earlier this month that it would respond “to threats from fellow OPEC producers.”
“I told Mr Barkindo that OPEC is being threatened due to unilateralism by certain members and this organization is likely to collapse,” Iran’s Oil Minister Bijan Zangeneh said, referring to a meeting with OPEC Secretary General Mohammad Barkindo.