Iran Accuses Saudi Arabia Of Breaching OPEC Ceiling

Dow Jones Newswires – Iran Thursday accused Saudi Arabia of breaching a collective OPEC agreement, reviving fears that the producer group's fractious meeting last year could be repeated.

Iran's Oil Ministry website Shana quoted Rostam Ghasemi as saying the Organization of Petroleum Exporting Countries "should produce up to 30 million barrels per day [as a group], but some countries including Saudi Arabia don't observe these regulations."

OPEC in December agreed to the collective ceiling of 30 million barrels a day in December, but the group's daily production is now higher by over a million barrels as Saudi Arabia replaces oil from sanctions-hit Iran.

"As an OPEC member, we enjoy the right to protest" against overproduction by a member, Ghasemi said.

A Gulf OPEC official said the Saudis weren't aware of any complaint to OPEC and are producing what their customers need.

The Islamic Republic has been escalating rhetoric against its Saudi arch-rival, reviving fears of a new rift within OPEC. A meeting last June ended acrimoniously after groups led by Saudi Arabia and Iran failed to agree on output levels.

Any new fracture within the group--whose members produce over one in three barrels consumed in the world each day--could impede its ability to coordinate production and may trigger more oil-price volatility.

Ghasemi Monday accused Saudi Arabia of trying to replace its oil, a policy he said will fail.

Iran itself has faced uphill challenges to sell its oil as the West moves ahead with sanctions over its controversial nuclear program. New international measures against its banking sector have impeded its oil sales even before a planned European ban on its oil starts this summer.

Ghasemi admitted that Iran has already halted supplying oil to U.K. major Royal Dutch Shell PLC (RDSA) because the Anglo-Dutch oil giant was unable to settle its debts. A Shell spokesman declined to comment.

The minister also said "Greek authorities had problems with payment" though he denied statements in Iranian media and by Greek refiners that sales to European nation had stopped.

According to consultancy Petro-Logistics, sanctions imposed on Iran by the West have already led to a drop in exports--Tehran denies this.

To fill in the gap, Saudi Arabia--the world's largest oil exporter--has hiked production to 10 million barrels a day, its highest level in three decades. This is set to continue after the U.S. and the European Union have ruled out easing sanctions on Iran despite a thaw in relations.

Talks between Iran and major powers over the weekend--the first in over a year--ended with a pledge to pursue discussions next month, interrupting months of steadily escalating tensions between both sides.

(Summer Said in Riyadh contributed to this report.)

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