Iran warns of market disorder if Opec members do not observe oil quotas

Published on 02/07/2012 00:58

IRAN’S oil minister yesterday called for an emergency meeting of energy cartel Opec, arguing that the current market value of oil had become “illogical”.

A local news agency quoted Rostam Ghasemi as saying that, at a recent meeting of the Organisation of the Petroleum Exporting Countries, member states agreed to hold an emergency meeting if oil prices fell below $100 per barrel.

International crude benchmarks posted their biggest quarterly declines on Friday since the fourth quarter of 2008 due to weak demand, ample supply and economic worries.

However, prices rebounded later on Friday on a deal by European leaders to shore up eurozone banks. Brent crude rose more than $6 a barrel to near $98, while US light crude jumped by more than $7 to settle just below $85.

Ghasemi said that if Opec members do not observe their quota and the organisation’s production ceiling of 30 million barrels per day, the market falls into disorder.

Iran is the second largest producer in Opec and earns about 80 per cent of its foreign revenue from exporting crude. It has been hit hard by sanctions levied by the US and other Western states over Iran’s disputed nuclear programme.

The news agency also quoted Iran’s central bank governor, Mahmoud Bahmani, as saying that Iran is “easily” able to sell its oil despite the US sanctions.

He said the Islamic Republic is having no trouble doing so because of the countries who have received waivers from the US to import some Iranian oil despite the punitive measures.

In its last meeting in mid-June, Opec agreed to adhere to the collective limit, implying a 1.5 million barrels-per-day cut from the actual supply for 12 members of about 31.5 million. To do that, Saudi Arabia would need to cut back sharply.