Thursday 2 June 2016 7:56 am

Iran says it won't support a production cap as tensions mount ahead of Opec meeting

Tensions are mounting ahead of today's meeting of the Organisation of Petroleum Exporting Countries (Opec), as Iran and Saudi Arabia look set to battle it out over a proposed new cap on oil production.

According to Opec sources, Saudi Arabia will propose a new output ceiling at today's meeting in Vienna, in an attempt to put an end to the market-share war that has seen oil prices struggle for over a year now.

But Iran, which has only just re-entered the market after Western sanctions against the country were lifted earlier this year, is unwilling to agree to such a plan.

Iranian oil minister Bijan Zanganeh said Tehran would not support the move. "An output ceiling has no benefit to us," he said on his arrival in Vienna.

Instead, Iran wants today's meeting to focus on production quotas for individual countries. 

The Middle Eastern state shook up the oil market last year when it reached a deal with Western negotiators over its nuclear programme. Oil prices were dragged down over fears that Iran would flood the market, with both existing supplies and oil fields coming back on stream.

Brent crude was trading up slightly at around $49.63 per barrel this morning, with US benchmark WTI dipping slightly to $48.94.