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OPEC's lost sway over oil prices

This weekend's summit focused mostly on poor nations, climate change, and the euro vs. the dollar.

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After Mr. Chávez urged OPEC's leaders to use their oil wealth to become an "active political agent" and warned that oil prices would rise above $200 a barrel if the US takes military action against his ally, Iran, Saudi King Abdullah dismissed his arguments.

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"Oil ... should not become a tool for conflict and emotions," he said. "Those who want OPEC to become an organization of monopoly and exploitation ignore the truth."

The joint OPEC statement released at the end of the summit said that the "stability of the oil market is essential," which oil analysts said was a repudiation of Venezuela's and Iran's aims.

Chávez also called on oil producers to sell to poor countries at prices at about one-fifth of the current market price, an idea that gained no traction and appeared designed to bolster his populist credentials. The only support for this idea came from Ecuador's leftist president, Rafael Correa. Even Iranian President Mahmoud Ahmadinejad, who Chávez was scheduled to meet later Sunday in Tehran, failed to back to him on this suggestion.

Mr. Ahmadinejad has portrayed himself as a man of the people and the promise of his 2005 election campaign to spread Iran's oil wealth to every dinner table struck a chord with voters. During a visit to Venezuela last January, Ahmadinejad kept that populist touch, announcing with Chávez the creation of a $2 billion anti-US fund. And on Sunday, after meeting with President Correa, Ahmadinejad promised to use his country's oil wealth to fight "imperialism."

But his promises remain unfulfilled for most Iranians, though Iran has seen its oil revenues surge in the past five years. Despite the cash boom, Iran's economy is struggling under the weight of high unemployment and rising inflation, not to mention US sanctions. He simply isn't in a position to back up his rhetoric, analysts say.

"Iran can't even think about this case [of cut-rate sales to poor countries], because the oil price works in the market economy," says Abbas Maleki, a former deputy foreign minister of Iran, and chair of the International Institute for Caspian Studies.

"The best way for Iran is to establish a fund for development, to support development projects," says Mr. Maleki, who was recently a fellow at Harvard University's Belfer Center for Science and International Affairs. "OPEC already has a development fund for Africa and Third World countries … Iran wants to spend all oil revenues in Iran."

Indeed, though OPEC made it clear it isn't in a position to lower prices, a silver-lining for the US is that Chávez's efforts to build a populist bloc within OPEC fizzled.

"There are basically two camps, Iran and Venezuela and one led by Saudi Arabia," says Mr. Alani, the oil analyst. "What happened at this conference was that the leaders of OPEC – Saudi Arabia and the Gulf states – made it clear they oppose the use of oil as a weapon, so the radicals within OPEC were isolated.

"What's going to happen now is the leaders will do everything they can to maintain supply. But there's very little they can do if there's an attack on Iran or something of that nature. In that case, prices will double, perhaps go to $300 a barrel."

Scott Peterson contributed reporting from Tehran, Iran.