Iran urges OPEC to arrest fall in oil prices
27 September 2014
Iran yesterday urged Opec members to make joint efforts to arrest a further fall in oil prices, which according to commentators, indicated a split with other members such as Saudi Arabia who faced lower budget pressures despite prices sliding towards $95 a barrel, Reuters reported.
Oil prices are down from $115 in June, on concerns over slowing global demand and higher supplies as Libyan output recovered.
"Considering the downward trend in prices, Opec members should try to temper production to avoid further price instability," Iran's oil minister Bijan Zanganeh was quoted by the Iranian oil ministry website Shana as saying.
Iran is the most price sensitive of the 12-members of the OPEC and often supports measures likely to boost prices, while Saudi Arabia and other Gulf Opec members have lower pain thresholds.
However, Opec's Gulf producers, so far, had not showed signs of distress, while Saudi Arabia's oil minister, in New York this week, appeared to downplay the price drop. Also delegates had stopped short of calling for price-supporting action.
In addition to lower-than-expected demand, a key factor behind the price drop had been a recovery in Libyan output to around 925,000 barrels per day (bpd) from 200,000 bpd in June.
Meanwhile, US oil futures gained yesterday on expectations of continued high demand, while global benchmark Brent held flat, bringing the price gap between the two contracts to the lowest point since July, The Wall Street Journal reported.
Light, sweet crude oil futures for November delivery settled up $1.01, or 1.1 per cent, at $93.54 a barrel on the New York Mercantile Exchange and priced gained 2.1 per cent for the week.
The global Brent contract did not change from $97 a barrel on the ICE Futures Europe exchange, posting a 1.4 per cent loss for the week.
The US contract, West Texas Intermediate, performed better than Brent this week with domestic stockpiles unexpectedly falling despite continued high refinery utilisation. Brent though remained under pressure over concerns about ample global supplies.
According to Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates who wrote in a press note, WTI prices were likely to hold between $90 and $95 a barrel heading into October because of high refinery run rates and low inventories at the Nymex physical delivery point in Oklahoma.
"Meanwhile," he said, "the Brent market continues to bear the brunt of a slowing in growth rates of major economic regions."