A declaration by Iran's Oil Minister, on Saturday, that a price of $100 for oil is "unsuitable" for both producers and consumers is the strongest sign yet that OPEC will stick to its output quota over the coming financial quarters.
Gholam Hossein Nozari was speaking at the second annual Gas Export Conference currently being held in Tehran, when he urged fellow members of the Organization of the Petroleum Exporting Countries (OPEC) not to pump too much oil and avoid a drop in prices.
Mr. Nozari said in his keynote speech: “OPEC members need to respect their output quota to avoid a worsening of the oversupply.”
Despite his very public address Mr. Nozari said he did not expect OPEC ministers to meet to discuss oil policy at any time ahead of the next inclusive pre-arranged summit in Algeria, in December.
Escalating oil prices and the global financial crisis have curtailed demand in the United States, the world's leading consumer of oil, and other major crude-hungry nations.
Concern about slowing demand has brought the price of oil back down to around $93 a barrel – a far cry from its record peak of over $147 on July 11.
OPEC – which supplies more than a third of the world's oil – agreed at its Vienna summit, in September, to trim output by around 500,000 barrels per day (bpd). The cartel's 12 members currently pump around 30.18 million bpd.
The Iranian Oil Minister said: “Oversupply could be controlled in the first quarter of 2009, given OPEC's decision to cut output.
“But, if they [the OPEC members] do not carry out the cut, oversupply could reach 1.2 million bpd,” warned Mr. Nozari.
Of the dozen nations, Saudi Arabia is the nation guilty of pumping the highest above its quota, so would shoulder the majority of the reduction burden. Iran would also have to take on its own fair share of cutbacks as a consequence of being the world's forth largest oil exporter.
Although, when reading between the lines, perhaps Mr. Nozari's words are not as black and white as they first appear.
Iran is standing-up to lead the charge in the hope that it can play a more defining role at the head of the nearing-omnipresent Organization and pursue its plans to increase Iran's gas exports.
Reza Kasaizadeh, Head of Iran's national gas company, told Iranian state TV on Saturday that they aimed to expand to provide for nearly 10% of the global gas demand.
In addition, Mr. Nozari's words – which upon inspection appear increasingly calculated – come at a time when the U.S. is pressuring European energy firms to end their business transactions with Tehran.