A Civil War inside OPEC

A showdown within OPEC may soon erupt. Iran and Saudi Arabia are at odds over oil cuts. Could this fissure lead to OPEC’s dissolution?

In This Corner

Iran and Venezuela have a few things in common. And, although both share a hatred for the U.S., the bond I’m referring to is their desperate need for higher oil prices.


Both have smaller production capacities than Saudi Arabia, so they would benefit from selling less oil at greater prices.

Oil and natural gas revenues are crucial to Iran’s economy. They constitute almost half of the country’s income. And the price of oil can have a drastic effect. A low price can slow economic growth and hurt government spending. Prices peaked at $77 per barrel back in July. As a result, revenue soared, allowing the government to increase spending. Recent price levels hovering in the mid 50s have led Iranian President Mahmoud Ahmadinejad to unveil a new budget. The plan includes a spending increase of 20% and assumes that oil prices stay over $33 per barrel.

Energy and Capital