Key members of OPEC (Organization of the Petroleum Exporting Countries) are wary of the strains in their alliance that could re-emerge with Joe Biden soon to become the US President, said sources close to the organisation to Reuters. They would also miss Donald Trump, the report said, who went from criticising the group to helping bring about a record oil output cut.
Biden, they say, could modify US diplomatic relations with three members of OPEC: Saudi Arabia (de facto leader of the group), and sanctioned countries Iran and Venezuela. Relationship with key non-OPEC producer Russia could also be affected.
Strict enforcement of US sanctions imposed on Iran and Venezuela by the Trump administration has kept millions of barrels of oil per day off the market, and if Biden were to relax measures on either in years to come, an increase in production could make it harder for OPEC to balance supply with demand.
Biden has said he would prefer multi-lateral diplomacy to the unilateral sanctions Trump has imposed, although that may not mean relaxation in sanctions any time soon. In his campaign, Biden said he'd return to Iran's 2015 nuclear deal if Tehran resumes compliance with the pact.
In August 2018, the Trump administration reimposed the post- Joint Comprehensive Plan of Action (JCPOA or Iran nuclear deal) sanctions and warned that anyone doing business with Iran will not be able to do business with the US. This had cut Iran's oil exports.
Some in OPEC fear that a return of Iranian volumes will add to oversupply without cutbacks elsewhere and worry about Moscow's continued participation in OPEC.
"Iran sanctions can be re-evaluated and then Iran will be back to the market, so again there would be oversupply and the current cut deal will be at risk," an OPEC source told Reuters before the election result was known.
"There is the risk of Russia leaving the OPEC deal too which means a collapse of the agreement, as it was Trump who brought Moscow on board," the source said.
In his campaign, Biden named Russia as Washington's most serious global threat and also pledged to reassess ties with Saudi Arabia.
Oil prices climbed more than 2 percent in the international market on Monday. Brent crude futures for January climbed $1.06, or 2.7 percent, to $40.51 a barrel.