The world has been awash in oil after OPEC committed to a strategy of increasing market share.
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At almost any other time, an escalating diplomatic conflict between OPEC members Iran and Saudi Arabia would mean a spike in oil prices.The world is awash in oil after OPEC members led by Saudi Arabia committed to a strategy of increasing market share by pressuring high-cost producers, rather than cutting output to support prices.Should violence break out in the eastern province of Saudi Arabia, home to most of its Shiite community and its richest oil fields, the impact on prices could be more significant, according to Alexandre Andlauer, an oil analyst at AlphaValue SAS in Paris.The dispute entrenches the biggest bearish factor in the oil market in the past year – OPEC's decision to keep pumping amid falling prices.Saudi Arabia and Iran are the largest and fifth-biggest producers in OPEC, respectively. Their worsening relations make it even less likely the group could overcome internal differences and agree to an oil-output cut to boost prices, Macquarie said.
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