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London — Saudi Arabia's strategy of mixing oil and politics looks a winning one, despite sacrificing OPEC camaraderie to appease US President Donald Trump.

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Fulfilling Trump's request to unleash its claimed 2 million b/d of spare capacity could help the US tighten up on Iran sanctions without causing a politically toxic spike in gasoline prices for the White House at home.

The US' hardline tack on sanctions could mean more than 1 million b/d of Iranian exports are shut in by year-end, opening the door for Saudi Arabia, which had urged Trump to be tough on Tehran, to claim its market share.

Loosening the taps also suits the wishes of Riyadh's other key ally Russia, which is keen to increase its own output and scale back its share of 1.8 million b/d of cuts which OPEC and its allies have maintained for the last year and a half.

OPEC spare capacity under threat as Saudis prepare to hike

The only downside for Saudi Arabia is OPEC cohesion, which now looks broken. The 15-member group's fudged agreement last month to maintain existing output quotas but reduce over-compliance looks in tatters.

Tehran is on the brink of demanding a potentially fractious emergency meeting, which would surely be supported by Venezuela and possibly Iraq.

Riyadh's ongoing commitment to the group is an open question.

"They certainly do not need OPEC now that they have this new friendship with Russia," said Helima Croft, RBC Capital Market's global head of commodity strategy. "The question is does Saudi Arabia sacrifice some strategic influence by casting aside the rest of the sovereign producers?"

Saudi officials did not respond to requests for comment.

Pumping more crude even at a lower price may suit Saudi Arabia's economy, which otherwise requires around $80/b to balance its budget, according to the International Monetary Fund.

Even before the ink had dried on the vaguely worded OPEC deal in June -- which specified no specific quotas -- Saudi officials were letting it be known to analysts that the kingdom was ready to pump as much as 11 million b/d.

Saudi Arabia's all-time monthly high in production was 10.66 million b/d in August 2016, according to S&P Global Platts OPEC survey archives. It produced 10.01 million b/d in May.

"In the short term, Saudi Arabia is trying to maintain the stability of the oil market to support consumers' demand, and in the long term trying to keep prices following the uptrend to help producers maintain investment," said Mazen al-Sudairi, head of research for Saudi-based Al-Rajhi Capital. "So the industry needs an increasing oil price and increasing production, and not just Saudi Arabia.

A PLACE FOR OPEC?

Without Saudi Arabia, OPEC appears toothless, especially with two of its founding members in Iran and Venezuela hit by US sanctions. Both nations have few options to oppose the kingdom or the Trump administration.

Iran can't prevent Saudi Arabia from unilaterally increasing its output, short of disrupting shipments through the Strait of Hormuz. Tehran in January 2012 threatened such a move in response to US and EU sanctions at the time, sending oil prices sharply higher and prompting the US, UK and France to deploy a fleet of warships to the strait.

Iranian officials have said Saudi Arabia would be in breach of the OPEC agreement if it produces above its quota of 10.06 million b/d, with Iran's OPEC Governor Hossein Kazempour Ardebili suggesting Saturday that Trump's request for more Saudi barrels could mean the end of the producer bloc.

"Putting aside the fact that Saudi Arabia has no such capacity to bolster its crude output, this demand could be inferred as an order for the kingdom to walk out of OPEC," Kazempour said.

With the global oversupply gone and a tighter market ahead, Saudi Arabia may believe OPEC has outlived its usefulness.

Closer alignment on oil policy with the US and Russia would also provide the kingdom with the extra political clout it needs to become the dominant power in the Middle East. In contrast, OPEC has to swell its ranks with small nations such as the Republic of Congo -- its newest member -- to remain relevant.

However, Carole Nakhle, an energy economist and CEO of consultancy Crystol Energy, believes Riyadh still sees a value in the Vienna based group, with Saudi Arabia's ties to Trump and Russian President Vladimir Putin still relatively new and unproven.

"Saudi Arabia has a more powerful impact on the global market through OPEC," she said.

Saudi energy minister Khalid al-Falih was not shy about his country's divided loyalties at OPEC's latest meeting in Vienna, telling reporters that as much as he respects the desires of Iran, Venezuela and other distressed members, "my bigger guiding principle is to be respectful of what the market needs."