Arab Today, arab today libyan oil return necessitates reduction of quotas
Last Updated : GMT 16:24:37
Arab Today, arab today
Arab Today, arab today

Libyan oil return necessitates reduction of Quotas

Arab Today, arab today

Arab Today, arab today Libyan oil return necessitates reduction of Quotas

Tehran - Fars

Iran\'s OPEC Governor Mohammad Ali Khatibi said members of the world oil cartel which boosted oil production to compensate for the loss of Libyan supply earlier this year must reduce output as Libya returns to world markets.Khatibi said the continuing global economic crisis would have a negative effect on oil demand. He predicted that Libya would soon be exporting some 400,000-500,000 b/d of crude and called on OPEC producers to rein in output. \"When the economic situation of industrial countries is not good and it is not likely for the oil price to surge, the oil price is at risk and management is necessary,\" he said. \"When oil demand falls and supply remains the same, oversupply can affect prices and it is necessary to manage the supply,\" Khatibi said.\"Those member countries in OPEC which increased their output when Libya\'s oil was not in the market should decrease their oil production when this country\'s oil returns to the market,\" he said. \"Continuation of oversupply by these countries will pressure prices,\" he warned, and added, \"These countries are not capable of tolerating oil prices below $90/barrel.\" Khatibi did not say which countries should rein in production. Several OPEC members boosted output in recent months as the uprising in Libya slashed Libyan production from close to 1.6 million b/d to virtually nothing. But OPEC kingpin Saudi Arabia accounted for the biggest increase. A senior Persian Gulf source said last week that Saudi Arabia was currently pumping around 9.8 million b/d -- 1.8 million b/d more than its quota under the previous output pact which became redundant in June. Estimates show OPEC production falling to 28.84 million b/d in April from 29.57 million b/d in January, but then rising in subsequent months to 30.13 million b/d in August. Saudi crude production climbing from 8.514 million b/d in January to 9.756 million b/d in August. Khatibi said that the approaching northern hemisphere winter would \"probably increase demand to some extent and push up prices\" but that oversupply from some producers would have a negative effect. In addition, \"the economic crisis of different industrial countries will have a negative impact on oil demand,\" he said, referring to a \"warning by the International Monetary Fund of another economic crisis to come soon\". He said, however, that it was difficult to predict which of these factors would prevail in the market. OPEC ministers are scheduled to hold their next meeting on December 14 in Vienna. OPEC\'s most recent meeting, on June 8, failed to reach agreement on production levels for the second half of this year. The previous output target of 24.845 million b/d, which covered 11 members but not quota-exempt Iraq, came into force in January 2009 when OPEC was trying to slash production in response to plunging oil prices and a deepening global recession. OPEC price doves, the Persian Gulf Arab states, have recently joined Iran\'s view that the worsening economic prospects in the West, specially in the US, require stabilized production at the present levels. On Saturday, Khatibi told FNA members of the cartel are narrowing down their differences over production ceiling, given the deteriorating economic conditions in the advanced countries. \"We do not accept that a gap exists in the OPEC since different views have always existed in the OPEC,\" Khatibi told FNA Saturday, dismissing media reports on the widening of rifts among the OPEC members in their latest meeting. Western media alleged that during the last OPEC meeting certain members like Saudi Arabia and Kuwait demanded an increase in the quota of the world oil cartel. He said that during that meeting, certain members were optimistic about the future of the world economy and wanted a hike in the production ceiling due to a forecasted increase in demand, but a majority of others held an opposite view. \"But Saudi and Kuwaiti oil ministers never said that they did not accept or would act in opposition to the OPEC decision,\" the Iranian governor reiterated. Khatibi further stated now that the prospects of the US and western economies have become a source of concern for all parties, \"I don\'t imagine that any difference exists in the members\' views about the global economy and all parties are coming to the conclusion that the world economy, specially the advanced countries, are faced with serious problems\". Earlier this month, Khatibi had touched on the deteriorating economic conditions in the West, and said that no major change in oil prices was perceived for winter due to the ongoing global economic recession. \"Due to the existing economic crisis, it is predicted that this year no significant changes happen in the oil price by the onset of the cold season,\" Khatibi said. He further explained that there were indications that lingering financial crisis in some western countries would lead to a drop in oil demand. \"The drop in demand in recent weeks has been to the extent that some non-OPEC producing countries were compelled to lower their output in proportion to the drop in demand,\" Khatibi said.

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