Iran's oil minister has called on Opec to cut production as the only way to prevent crude prices falling.
Iran calls on Opec to cut output
TEHRAN // Iran's oil minister renewed his call for Opec when it meets later this week, saying this was the only way to prevent crude prices falling further, the official Irna news agency reported today. "The only way to prevent global oil prices from falling further is to cut Opec's production ceiling," the oil minister Gholamhossein Nozari said late yesterday, according to Irna. Mr Nozari called to cut production by 1 million to 3 million barrels per day (bpd) because of the financial crisis and a drop in world oil demand.
Pressure is mounting within the Organisation of the Petroleum Exporting Countries (Opec), which is due to hold an emergency meeting in Vienna on Friday, to reduce supplies after oil prices tumbled to half their July peak of $147 a barrel. Benchmark US crude was on Friday trading at about $72. Mr Nozari earlier this month said Iran, Opec's second biggest producer after Saudi Arabia, would seek an output cut at the cartel's next meeting. That gathering was brought forward from November.
Other Iranian media yesterday quoted him as saying that Iran wants higher oil prices and seeks to create balance in the market between supply and demand. Economists say Iran has become increasingly dependent on high oil prices, some saying it now needs $70 to $75 a barrel for its crude to balance its books. Iranian crude tends to trade at a discount to international benchmarks. Raja Kiwan, a Dubai-based analyst with PFC Energy, said today that a production cut of even 1 million barrels per day is unlikely to reverse slumping oil prices in the short term. He says Opec is probably going to use the meeting to plot out a longer-term strategy and reassert control over the market. *Agencies