Iran Says Oil Market in Balance, Echoing OPEC Rival Saudi Arabia
Iran’s governor to OPEC, Mohammad Ali Khatibi, said global crude markets are in balance, echoing comments from Ali al-Naimi, oil minister of rival Saudi Arabia.
Al-Khatibi said in Riyadh he foresees a “positive” meeting of the Organization of Petroleum Exporting Countries next month. There is no oversupply, al-Naimi said in the Saudi Arabian capital yesterday, adding today that he is “very happy” with crude prices.
The Organization of Petroleum Exporting Countries meets on Dec. 14 in Vienna to decide whether it needs to alter production targets. Oil ministers from Iran, Nigeria and Algeria said on Nov. 13 that markets aren’t over-supplied, a sign they see little need to alter the group’s output yet.
The converging views of Saudi Arabia and Iran, OPEC’s biggest members, contrast to their clash in June when six members including Iran rejected a Saudi proposal to boost output to replace Libyan crude shut in as a result of fighting in the North African country. Al-Naimi said at the time that the session was “one of the worst meetings we’ve ever had.”
“There were two views on global demand in June, one was optimistic and the other was cautious,” he said. “Now everyone is convinced that we need to be cautious.” The current outlook for demand is not as “rosy” as some of OPEC’s “optimistic” members had anticipated in June, Khatibi said.
OPEC should be wary of a possible drop in demand next year, Khatibi said in an interview today in Riyadh. He said the opposing views had nothing to do with politics and were due “purely” to different economic data and projections.
The International Energy Agency, the Paris-based energy adviser, cut its 2011 global oil-demand forecast for a fourth month on Nov. 10 and lowered estimates for next year on weaker growth prospects for developed nations.
An informal agreement to reduce oil production will be needed should crude drop to below $95 to $100 a barrel, an OPEC Gulf delegate said in an interview yesterday, asking not to be identified. Libya, Iraq, Angola and Nigeria are increasing output, while demand for OPEC oil will drop by 1 million barrels a day in the second quarter next year to 29 million barrels a day, the delegate said.
OPEC members will need to cut back from current levels as Libya returns, Abdalla el-Badri said yesterday. “Libya is coming back very strong. I think in six months time from the start of production they will reach 1 million barrels a day.”
Libya, which resumed pumping oil in September, will produce as much as 800,000 barrels a day by the end of this year, the chairman of state-run National Oil Corp., Nuri Berruien, said Nov. 13. Libya is the only OPEC member not exceeding its official quota, aside from Iraq, which has no target.
Brent crude for January settlement was at $106.87 a barrel, down 69 cents on the London-based ICE Futures Europe exchange at 1:49 p.m. local time.
Prices are still high and the market is “tight,” IEA Executive Director Maria van der Hoeven said yesterday. Brent, the benchmark for more than half the world’s oil, has risen 12 percent this year. El-Badri said prices are “reasonable.”
“December will be a very comfortable meeting,” el-Badri said. On whether the group will leave output quotas unchanged, he said, “Ministers will decide, but you will not see the friction that you saw last time.”
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