Iran leans to oil output cut as OPEC eyes slowdown

CARTEL POWER: OPEC members pump roughly 40 percent of the world's oil. (Getty Images)

Iran is set to push for a production cut at OPEC's emergency meeting in November as ministers from the oil producing group express concerns over sliding crude prices and a worsening global financial crisis.

On Sunday, the Islamic Republic's Oil Minister Gholamhossin Nozari was quoted as saying by a local newspaper that unless OPEC acted decisively to arrest the current slide in oil prices, investment conditions in the oil industry would be hit severely.

"At this meeting our country's request (for the Organisation of Petroleum Exporting Countries) to cut production and the members' crude quotas will be submitted," Nozari told the Iranian newspaper the Poul daily.

The Islamic Republic will study carefully the steep slide in oil prices and the deteriorating global economy, before making a proposal on output reductions for the cartel, said the producer's OPEC governor, Muhammad Ali Khatibi.

"It is not fair to say so early. That is why we should consider all factors carefully and look at the supply-demand balance," Khatibi told newswire Reuters.

Khatibi said that especially troubling was how deep oil prices had fallen in recent months versus other financial indexes.

"Oil prices have fallen more than 40 percent and the decline is not comparable to other financial indexes," he said.

Oil prices touched 13-month lows on Friday in a global flight from risk amid concerns of a global recession and further signs of cooling energy demand.

US crude plunged $8.89 to settle at $77.70 a barrel on Friday.

While the falling price has been a relief for consumer countries, OPEC members rely on oil revenues.

Along with Iran, the world's fourth-largest crude producer and traditionally a price hawk in OPEC, Nigeria, Qatar, Libya and Iraq have floated the idea of a cut in the group's oil production levels.

The cartel, which pumps about 40 percent of the oil produced globally, does not officially have quotas, but the term is sometimes used to describe agreed output targets for each member country.

OPEC agreed to comply with its formal output target at its September meeting, a move which meant the group would cut supply by about 500,000 barrels per day (bpd), about 1.5 percent of its production in August.

On Sunday, Qatar's Oil Minister Abdullah Al-Attiyah said OPEC will cut supply to balance the market if the global financial crisis slows demand, reiterating what he had said last week.

"I have nothing more to add to what I already said last week," he told Reuters.

OPEC President Chakib Khelil was quoted as saying by Algeria's official news agency that the future of oil demand in China and the Middle East was a "great unknown", and it was essential for OPEC to balance supply and demand if a surplus of supply developed.

"If the winter is harsh, there will be fewer problems, but in the second quarter, we are going to record a fall in demand and that is what the organisation is going to study in Vienna, the agency APS quoted him as saying.

The current turmoil in financial markets, which has sent global bourses into a tailspin, is expected to keep oil markets depressed, Mohammad Alipour-Jeddi, head of OPEC's petroleum studies department, said in a statement to the International Monetary Fund's steering committee on Sunday.

"Significant risks from the banking and credit market difficulties in the emerging and developing countries could curtail investment, consumer demand and consequently economic growth," his statement said. (Reuters)

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