Iran presses case for OPEC output cut

PRICE STABILITY: Nozari said the market was oversupplied by around two million bpd. (Getty Images)

Iran's oil minister said on Sunday the oil market was estimated to be oversupplied by about two million barrels per day (bpd) and OPEC would have to decide next month in Algeria about what to do to stabilise prices.

Gholamhossein Nozari made the comments a day after OPEC ministers met in Cairo, where they deferred a decision on a new supply cut amid signs Saudi Arabia and its Gulf allies wanted more adherence to curbs put in place over the past two months.

Ministers from the Organisation of the Petroleum Exporting Countries next meet in Algeria on Dec. 17.

"Market assessments indicate that the market has around two million bpd of oversupply," Nozari told reporters in Tehran.

"In Algeria, we will have to make a decision to establish balance between supply and demand," he added.

OPEC delegates in Cairo said ministers had discussed how much more they needed to cut in December. Recent output curbs have amounted to around two million bpd.

Most, including Gulf producers led by Saudi Arabia, saw a requirement to slice another one to 1.5 million bpd. But for that to happen, delegates said, Riyadh wants proof that all fellow members are meeting their part of existing curbs.

The delegates identified Iran and Venezuela, perennial price hawks who want quicker cuts, as sources of concern on quota compliance. Venezuela denied the charge. Iran did not comment.

Iran, OPEC's second largest producer, has repeatedly said it wants a further supply reduction after crude prices tumbled more than $90 since hitting a peak of $147 a barrel in July.

Economists say Iran needs a price of at least $70 to $80 a barrel to avoid having to make big spending cuts in next year's budget and to keep its current account in the black. US crude last traded at around $55 a barrel on Friday.

Saudi Arabia, OPEC's biggest producer, for the first time in years identified a "fair" price for oil during the Cairo meeting. It cited $75 a barrel.

Iran's OPEC governor, Mohammad Ali Khatibi, said OPEC wanted to see November production figures before taking a new decision.

"OPEC's November output figures are not out yet. There are plans to seriously consider an output cut in Algeria," he said.

"When the figures are out there can be a much better decision made on an output cut," Khatibi added, speaking on the sidelines of Sunday's energy conference in Tehran.

Oil prices have tumbled as result of shrinking demand in Western economies.

"There was unanimity [in Cairo] that the market is oversupplied. The demand has sharply dropped because of the global economic recession," Nozari said. (Reuters)

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