Iran has called for an emergency Opec meeting to address oil production levels as a European embargo came into full effect yesterday.
The sanctions by the European Union, intended to pressure Tehran into giving up a nuclear programme that it says is peaceful but which the West insists is for military purposes, are meant to cut oil sales that last year contributed 80 per cent of the nation's foreign currency income.
Saudi Arabia, along with other Arabian Gulf states, increased production to address high oil prices this year, a move criticised by Opec hawks Iran and Venezuela. The group's 12 members pumped about 1.6 million barrels per day (bpd) above their collective 30 million bpd ceiling in May. "If Opec members don't observe [the] agreed production ceiling, it will be followed by disorder in oil markets," Rostam Qasemi, Iran's oil minister, said on the ministry's website on Saturday.
"It was agreed if oil prices fall below $100 per barrel it means that prices are in crisis, so we have urged [the] secretary general of Opec … to make preparations for holding an emergency meeting."
North Sea Brent crude was trading at US$97 a barrel on Friday, up 6 per cent from the previous day.
Last month, as Asian countries decreased purchases in preparation for the sanctions and Iranian storage filled up, Iran's pumping levels fell to 2.95 million bpd, the lowest level since 1989.
The decline has allowed Iraq to overtake Iran as Opec's second-biggest producer.
The EU sanctions, which began coming into effect in January in coordination with US measures, target oil contracts, insurance covering tankers and banks that process payments.
The US has exempted China and Singapore from sanctions because they had already "significantly reduced" purchases from Iran.
"Today, we are facing the heaviest of sanctions and we ask people to help officials in this battle," Mohammad Reza Rahimi, an Iranian vice president, said yesterday on state television.
"We have not remained passive. To confront the sanctions, we have plans in progress."
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