* No deal on OPEC output ceiling
* Iran wants individual-country quotas
* Saudi minister Falih: we won't flood the market
* OPEC agrees new secretary-general in rare compromise
(Updates oil price)
By Reem Shamseddine, Rania El Gamal and Alex Lawler
VIENNA, June 2 (Reuters) - OPEC failed to agree a clear
oil-output strategy on Thursday as Iran insisted on steeply
raising its own production, though Tehran's arch-rival Saudi
Arabia promised not to flood the market and sought to mend
fences within the organisation.
Tensions between the Sunni-led kingdom and the Shi'ite
Islamic Republic had blighted several previous OPEC meetings,
including in December 2015 when the group fell short of agreeing
a formal output target for the first time in years.
Strains were less acute on Thursday, however, as new Saudi
Energy Minister Khalid al-Falih showed Riyadh wanted to be more
conciliatory and his Iranian peer Bijan Zanganeh kept his
criticism of Riyadh to an unusual minimum.
In a rare compromise, OPEC also decided unanimously to
appoint Nigeria's Mohammed Barkindo as its new secretary-general
after years of friction over the issue.
Saudi Arabia and its Gulf allies had tried to propose OPEC
set a new collective ceiling in an attempt to repair the group's
waning importance. But Thursday's meeting ended with no new
policy or ceiling amid resistance from Iran.
Despite the setback, Saudi Arabia moved to soothe market
fears that failure to reach any deal would prompt OPEC's largest
producer, already pumping near record highs, to raise production
further to punish rivals and gain additional market share.
"We will be very gentle in our approach and make sure we
don't shock the market in any way," Falih told reporters.
"There is no reason to expect that Saudi Arabia is going to
go on a flooding campaign," Falih said when asked whether Saudi
Arabia could accelerate production.
The market has grown increasingly used to OPEC clashes over
the past two years as political foes Riyadh and Tehran fight
proxy wars in Syria and Yemen.
Saudi Arabia effectively scuppered plans for a global
production freeze - aimed at stabilising oil markets - in April
in the Qatari capital of Doha. It said then that it would join
the deal, which would also have involved non-OPEC Russia, only
if Iran agreed to freeze output.
Tehran argues it should be allowed to raise production to
levels seen before the imposition of now-ended Western sanctions
over Iran's nuclear programme.
Zanganeh said Tehran would not support any new collective
output ceiling and wanted the debate to focus on
individual-country production quotas, effectively abandoned by
OPEC years ago.
"Without country quotas, OPEC cannot control anything,"
Zanganeh told reporters. He insisted Tehran deserved a quota -
based on historic output levels - of 14.5 percent of OPEC's
overall production.
OPEC is pumping 32.5 million barrels per day (bpd), which
would give Iran a quota of 4.7 million bpd - well above its
current output of 3.8 million, according to Tehran's estimates,
and 3.5 million, based on market estimates.
"BENIGN DEAL"
At its previous meeting in December 2015, OPEC effectively
allowed its 13 members to pump at will.
As a result, prices crashed to $27 per barrel in January,
their lowest in over a decade, but have since recovered to
around $50 due to global supply outages.
On Thursday, Brent prices were down 1.5 percent at $49 per
barrel after the OPEC meeting but later rallied on data showing
a weekly drawdown in U.S. crude stockpiles. O/R
That OPEC could not agree on a benign deal is a sign that
political differences are undermining the organisation, said
Gary Ross, founder of U.S.-based PIRA consultancy.
"It is bearish short-term for oil prices. But what is also
important is that Saudis are not planning to flood the market,"
Ross added.
Zanganeh made a few conciliatory remarks, saying he was
happy with the meeting and received no signals from other
producers that they planned to increase output.
For Amrita Sen of Energy Aspects, who like Ross travelled to
Vienna to meet OPEC officials, the meeting sent an encouraging
signal about the state of the organisation.
"After the Doha debacle, it actually restores market
confidence that Saudi Arabia is committed to OPEC. This is a
success compared to three days ago when people had been
expecting Falih to walk out of the OPEC room," said Sen.
Falih was the first OPEC minister to arrive in Vienna this
week, signalling he takes the organisation seriously despite
fears among fellow members that Riyadh is no longer keen to have
OPEC set output.
"There could be shorter-term situations in which, in our
view, OPEC might intervene and yet other situations - such as
long-term growth of marginal barrels - in which case it should
not," Falih told Argus Media ahead of the meeting.
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