Iran on Friday urged OPEC members to make joint efforts to keep oil prices from falling further, highlighting a split with other members such as Saudi Arabia who face lower budget pressures despite a slide in prices towards $95 a barrel.
Oil has fallen from $115 in June, pressured by concern about slowing global demand and higher supplies as Libyan output recovers, raising concern among some oil exporters of lower revenues.
“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 has among the highest oil-price needs within the 12-member Organization of the Petroleum Exporting Countries and often supports measures likely to boost prices. Saudi Arabia and other Gulf OPEC producers have lower pain thresholds.
But OPEC’s Gulf Arab producers, so far, remain unruffled. Saudi Arabia’s oil minister, in New York this week, appeared to downplay the price drop, while delegates have stopped short of calling for price-supporting action.
“I am still relaxed,” said a delegate from one of OPEC’s Gulf members this week, referring to the oil market situation.
Besides lower-than-expected demand, a key factor behind the drop in prices has been a recovery in Libyan output to around 925,000 barrels per day (bpd) now from just 200,000 bpd in June.
Other OPEC members, mainly Saudi Arabia, had informally pumped more to make up for lower Libyan output and other outages and OPEC sources have said they could pare back the extra supply if needed to support prices.
Saudi Arabia, the world’s top exporter, cut its output by around 400,000 barrels per day in August. But the amount of crude supplied to the market – both domestically and for export – was 9.688 million bpd, compared to around 9.66 million bpd in July, indicating no change in Saudi oil supply.
Industry sources in Saudi Arabia have said the prospect of any significant change in output this year is unlikely.
“As we approach winter and with the end of the refinery maintenance season, global demand is likely to pick up therefore Saudi oil production is not expected to see a major change,” an industry source said on Thursday.
Still, OPEC’s next meeting, on Nov. 27, will likely see a debate on whether its output target of 30 million bpd is appropriate for 2015, given that OPEC and other forecasters expect a further drop in global demand for OPEC crude.
The OPEC secretary general said last week he expected OPEC production to be around 29.50 million bpd in 2015, not 30 million bpd. But the United Arab Emirates, a core Gulf OPEC producer, said it was too early to predict a cut in the OPEC target.
“There may be different levels of concern, but what they are all saying is we’ll look closely at the market in November,” said an OPEC source.