Allow us to introduce FastiveJuly 8, 2015 9:00
Iran Calls For OPEC Cuts, Arab Members Unlikely To Agree
Price hawk Iran OPEC president for December meeting; Gulf Arab OPEC members still keeping output high; Qasemi says Iran prefers higher oil than current level
November 12, 2011 11:51 by Reuters
OPEC president Iran threw down the gauntlet to the Gulf Arab oil producers on Friday, asking them to reduce output back to pre-Libya crisis volumes, making agreement on output policy at OPEC’s December meeting more difficult.
The Organization of the Petroleum Exporting Countries, source of more than a third of the world’s oil, meets on Dec. 14 in Vienna, six months after its last gathering collapsed in acrimony and without a deal.
In June, Iran successfully opposed a move led by top exporter Saudi Arabia to raise OPEC quotas to meet a shortfall in supplies from Libya. Saudi and its Gulf OPEC allies raised production anyway after the meeting — a move criticised by price hawk Iran.
“We will ask the countries that increased their production when Libya stopped production to change the level of production to the previous level,” the Iranian oil ministry’s SHANA website quoted new oil minister Rostam Qasemi as saying.
A cut in supplies to May’s levels would entail removing some 500,000 barrels per day (bpd) from OPEC production, a move unlikely to find support among the Gulf Arab OPEC members while oil prices remain well above $100 a barrel.
“I don’t see any need for OPEC to adjust production,” a delegate from a core OPEC member said. “The market still needs it,” the delegate said, referring to the increased output from the Gulf Arab members.
Christophe Barret, oil analyst at Credit Agricole in London, also thought the prospect of OPEC and Saudi Arabian output curbs unlikely.
“With prices at current levels there is absolutely no reason for OPEC to cut and I’m sure that Saudi Arabia would be very happy to see prices coming down from where they are,” he said.
Iran’s call for supply cuts may also make agreement on a new OPEC production target more difficult. Failure to do so could be damaging for the group should it need to curb supplies in 2012 in the event of a serious weakening of the world economy.
OPEC in December 2008 set a target for 11 members, all excluding Iraq, to pump 24.84 million bpd. They are pumping more than 2 million bpd more than this, and OPEC officials have said that target is no longer valid.
GRADUAL PROCESS OF CUTBACKS
Gulf OPEC delegates have said they will reduce output to make way for a recovery in Libyan supplies when it happens, although this will probably be a gradual process extending into 2012.
OPEC supply has fallen slightly in the last two months as reduced output from Iraq, Nigeria, Saudi Arabia and Angola offset a further rise in Libya, according to the latest Reuters survey published on Oct. 31.
But output remains higher than it was in May, when Libyan output had slowed to a trickle. Total OPEC production in October was 29.59 million bpd, 490,000 bpd higher than 29.1 million bpd in May, according to Reuters estimates.
Brent crude was steady just below $114 a barrel on Friday, after sharp gains in the previous session and Qasemi said prices around or above $100 were “appropriate”.
“The current situation of oil is relatively fair but as a producer we prefer that the price is better than its current level,” he was quoted as saying by the official IRNA news agency.
OPEC’s Gulf Arab members are typically its most moderate on prices because they do not want high energy costs to restrict economic growth and long-term demand for their main source of export revenue.
One Gulf Arab official told Reuters in September a price of $90 was “high” and those producers were unlikely to reduce supplies to prop up oil prices unless crude fell below $90 for a sustained period.
By Mitra Amiri and Alex Lawler
(Editing by Richard Mably)