Text size:

  • Small
  • Normal
  • Large
Iranian oil technicians work at the oil separator facilities in the Azadegan oil field, about 800km south-west of the capital, Tehran.
Vahid Salemi STR
Iranian oil technicians work at the oil separator facilities in the Azadegan oil field, about 800km south-west of the capital, Tehran.

Iran says Opec could cut output

Opec could cut oil production next week due to crude's steep decline from record prices, Iran's Opec governor says.

Iran has accused energy consuming nations of biting the hand that fills their petrol tanks, and said Opec could call for oil production cuts next week because of crude's steep decline from record prices. Oil prices have fallen nearly 25 per cent in less than two months to about US$113 a barrel today from a record $147.27 a barrel on July 11. "In view of the drop in oil prices, there is this possibility that Opec would approve an output cut in its upcoming meeting in Vienna," said Mohammad Ali Khatibi, the Iranian Opec governor, to Iran's Mehr news agency. "The supply of oil is more than demand in the market. If Opec is interested in removing the excess oil from the market, it must approve the output cut plan." Mr Khatibi added that big oil consumers were hurting their economic interests by imposing sanctions on producers. "The enforcement of these sanctions will disrupt the production of oil and cause consuming countries to pay more for the oil they buy," he said. Although Mr Khatibi did not mention any names, his comments were an unmistakable reference to the US-led sanctions that Western nations have imposed on Iran over concerns about the country's nuclear programme, especially its refusal to suspend uranium enrichment. Washington and its allies accuse Iran of seeking to develop nuclear weapons, a charge Tehran has consistently denied. Iran, Opec's second-biggest oil exporter and a co-founder of the organisation in 1961, is pumping 4.23 million barrels per day (bpd) of crude, according to Seifollah Jashnaz, the managing director of the National Iranian Oil Company. Although a record for the period since Iran's Islamic revolution in 1979, this falls well short of the country's peak output of 6.1 million bpd in 1974. Analysts have said bureaucratic inefficiency and the unattractive terms Iran offers to foreign investors in its energy sector, as well as international sanctions, were preventing the country from boosting oil production to pre-revolutionary levels. Opec's 13 member nations are due to meet on Sept 9 to discuss, among other things, whether to make any changes to oil production quotas. Most analysts predict the group will leave its output targets unchanged. As a price hawk within the organisation, Iran is growing increasingly isolated. Even Venezuela - which along with Iran consistently spurned calls from consuming countries such as the US for Opec to increase oil output as prices surged - recently said it would ask for production to be held steady as long as oil prices remained above $100 a barrel. Last month, departing from his previous rhetoric, the Venezuelan president Hugo Chavez said it was good that oil prices had fallen from "irrational" levels. He said they should settle near $100 a barrel. On Sunday, the Iranian oil minister Gholamhossein Nozari said $100 a barrel was the minimum oil price Iran would find acceptable. Oil prices in the past few weeks have remained remarkably stable in the face of a series of supply disruptions due to a fire in a major pipeline in Turkey, Russia's subsequent invasion of Georgia, a strategic oil-transit country, and the hreat of damage to US oil installations from a major hurricane. This has led some analysts to suggest they could fall further, once supplies are restored - as they did early on Monday, declining nearly $3 a barrel as the hurricane threat lessened. The main factor driving crude downwards has been falling demand for refined petroleum products in the US and Europe in response to high prices and weakening economic conditions. Recently, there have been signs that the previously robust oil demand growth shown by large Asian economies such as China's could be slowing. For example, stockpiles of jet fuel have been building in the Far East as consumers have cut back on air travel after the Beijing Olympic Games. But if oil prices do resume their previous downwards course, Opec may not have to cut its members' formal oil production quotas to tighten crude supplies. Several Opec countries, most notably Saudi Arabia, have been pumping above their quotas in recent months in response to the earlier calls from oil consumers to increase production. If oil prices do not fall too rapidly, a return to the strict observance of quotas by Opec members could stabilise them. During a visit to Tehran last month, the Opec president Chakib Khelil called for Opec members, except Iraq and Angola, to abide by their quotas. tcarlisle@thenational.ae

Back to the top

More articles


Editor's Picks

 Would you like it in blue? An Afghan shopkeeper shows a burqa to a customer at a bazaar in Herat. (Aref Karimi / AFP /  April 13, 2014)

In pictures: Best business images for the week to April 24, 2014

Here are some of the best business images for the week to April 24, 2014.

 That's asking a lot: this four-bedroom duplex penthouse apartment  at Marina Residence in Dubai is for sale with an asking price of Dh15.7 million. (Courtesy Better Homes / April 2014)

In pictures: Palm Jumeirah penthouse listed for Dh15.7 million

A four-bedroom duplex penthouse in Marina Residence 3 on Dubai's Palm Jumeirah is on the market for Dh15.7 million.

 Room with a view from one of the 21 duplex penthouses located in the Gate Towers sky-bridge. The sports courts and swimming pools can be seen below. Courtesy Alda

In pictures: Aldar’s Gate Towers Penthouse Collection on Reem Island

Aldar launched its Gate Towers Penthouse Collection at Cityscape Abu Dhabi. The launch features 21 penthouses spanning the skybridge, with each having a private indoor pool and incredible views.

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National