Despite US attempts to widen a gap between Riyadh and Tehran by means of a horribly ridiculous plot, Saudi Arabia's biggest cut in oil output in three years signifies that the Arab state is finding common cause with its long-time rival Iran.
The kingdom reduced supply by 400,000 barrels a day, or about 4 percent, last month, Oil Minister Ali al-Naimi said Oct. 8, reversing increases that it started in April when declining Libyan exports sent North Sea Brent to a 2 1/2-year high.
Crude prices have fallen 14 percent since then as the North African nation revived production and the International Energy Agency (IEA) lowered its forecast for global demand.
Cutting output brings Saudi Arabia closer to Iran, which this year urged Arab members of the Organization of Petroleum Exporting Countries to restrict supplies.
"Neither country wants prices to fall below $100," Leo Drollas, the London-based chief economist at the Centre for Global Energy Studies, an oil consultant founded by former Saudi Oil Minister Zaki Yamani, said in a recent interview.
He said, "Iran needs oil as high as it can get it, while the Saudis can live with $90. As oil falls, they become bedfellows."
OPEC's oil basket, a weighted average of the group's main export grades, fell to $99.64 on Oct. 3, dropping below $100 a barrel for the first time since Feb. 18 and ending its longest run above that level. Brent, a benchmark for more than half the world's oil, slid 11 percent on the ICE Futures Europe exchange in September, the biggest monthly decline since May 2010.
Brent traded at $108.91 a barrel Wednesday, 14 percent below this year's settlement high of $126.65 reached on April 8. OPEC's basket was worth $109.11 on Monday.
Saudi Arabia reduced supply to 9.4 million barrels a day in September, from 9.8 million in August, according to the Riyadh- based Joint Organization Data Initiative, or JODI, which compiles statistics supplied by governments. The kingdom hasn't lowered output so much in any month since December 2008, when OPEC sought to revive prices as the global financial crisis began driving the world into a recession.
The IEA cut its 2011 global oil-demand forecast for a third month on Oct. 12. The world will consume 89.2 million barrels a day this year, the Paris-based adviser to 28 governments said in a monthly report, compared with a July forecast of 89.5 million. It also lowered expectations for 2012 demand.
Saudi Arabia, a kingdom allied with the US, accounted for 28 percent of OPEC production last year, according to the producer group's own data. OPEC President Iran, an arch foe, supplied 12 percent.
The Saudis move comes in the backdrop of a high-profile US allegation on Oct. 11 that Iran was behind a plot to murder Saudi Ambassador Adel al-Jubeir. Manssor Arbabsiar, an Iranian- American car salesman, pleaded not guilty in a Manhattan federal court on Oct. 24 to conspiring with another Iranian to kill the diplomat.
Iran has denied the accusation, and the Saudi envoy to Tehran said his government would not buy the US accusation without convincing proof.
OPEC failed to reach a consensus at its June meeting when six members, including Iran, opposed Saudi Arabia's push to pump more oil. OPEC meets next on Dec. 14.
Last month and earlier this month, Iran's OPEC Governor Mohammad Ali Khatibi, whose country presides over the oil cartel, had informed the Iranian media that after the June meeting, Riyadh has narrowed down differences with Iran and has accepted that Iran's market forecast and its proposal for output quotas were right.