Algeria has repeated calls by Opec hawks for an emergency meeting over falling oil prices as sanctions on Iranian crude came into full force.
In the days leading up to a European embargo that took effect on Sunday, Iran and Venezuela said the organisation could meet in the third quarter to address oil prices, which dipped below US$90 a barrel for North Sea Brent crude last month.
Iran has since written to Abdul Kareem Al Luaibi, the current president of Opec, to request an emergency meeting, Mohammad Ali Khatibi, the Iranian Opec governor, told Bloomberg yesterday.
Although prices have regained strength thanks to a euro-zone agreement that has buoyed hopes for a resolution to the debt crisis, Brent dipped 1.2 per cent yesterday to $95.76 a barrel.
"If the deterioration of the oil market reaches a certain point, the group will be holding an extraordinary meeting to study ways and means to correct this imbalance," Youcef Yousfi, the Algerian oil minister, was quoted as saying by APS, Algeria's official news agency. "There are currently 2 million barrels per day [bpd] extra oil on the market from a year ago."
Opec's price hawks, which spar with Saudi Arabia and other Arabian Gulf nations that hold spare production capacity, fault the kingdom for pumping above the group's 30 million bpd quota and pushing down prices. At the group's output meeting last month, Opec opted to leave the quota unchanged.
But analysts expect Saudi Arabia, which holds most of Opec's 2 million bpd spare production capacity, to lower its pumping levels soon.
"With the current falls in outright prices and growing evidence of global stock builds, we expect the kingdom will begin to scale back output," wrote JBC Energy in Vienna in a research note.
The European Union embargo, aimed at pressuring Iran to give up its disputed nuclear programme, has already eliminated 1 million bpd of Iranian supplies from the market, according to the International Energy Agency.
The shortfall and concerns over reactions from Iran, which has threatened to close the Strait of Hormuz, could push prices back up.
"With the Iranian economy in a chokehold, Iranian politicians are likely to get increasingly desperate," wrote Jason Schenker, the president of the consultancy Prestige Economics in Austin, Texas.
"At this point, Iran is likely do its best to force a stalemate, and the hotter the rhetoric and posturing gets, the more crude oil prices will be pushed higher."
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