OGJ Oil Diplomacy Editor
LOS ANGELES, May 25 -- The Organization of the Petroleum Exporting Countries is acting to balance the global market and will continue to do so, according to Iran’s OPEC Gov. Mohammad Ali Khatibi.
"OPEC is trying to compensate part of the shortage of supply of crude and create a balance in the market and in the future OPEC will continue to do its onerous duty which is to create balance in the market," said Khatibi.
He said he expected global oil demand to rise to 88.9 million b/d by yearend and demand for OPEC crude to rise to 29.8 million b/d by yearend from 29.7 million b/d in the first quarter.
Khatibi’s remarks came as something of a reversal from earlier comments by Iranian officials concerning any possibility of OPEC increasing its production in an effort to support the global economic recovery.
“An increase of production will have no impact on the prices,” said Iran’s former Oil Minister Massoud Mir-Kazemi on Apr. 19, describing oil prices that broke 2½-year highs above $127 in April as “not extraordinary.”
However, Mir-Kazemi’s comments were at odds with other OPEC members who the day before had expressed concerns about costly oil hurting fragile economies in consumer countries.
On Apr. 18, Abdullah Al-Badri said OPEC was "generally concerned about the high prices," and that the current levels are a "risk factor.”
Al-Badri said that efforts were needed to curb speculation, to lower taxes on oil and to find other measures that could help ease prices given that there was little in the way of shortage of crude on the market.
While the world economy is better off than it was 2 years earlier, the recovery is "patchy," Saudi Arabia’s Oil Minister Ali I. Al-Naimi said, adding that some countries still suffer from "unacceptable" unemployment levels while others are struggling with concerns about their financial institutions.
Iranian officials today gave no explanation for the apparent reversal in their country’s position on production increases by OPEC members, but the statement by Khatibi will be viewed as a positive sign coming from Tehran.
Khatibi’s statement came just days after Iran’s Guardian Council, a powerful body of clerics and jurists appointed by Supreme Leader Ali Khamenei and parliament, ruled that President Mahmoud Ahmadinejad could not serve as the country’s caretaker oil minister.
The council’s decision, essentially a rebuke of the Iranian president, came after Ahmadinejad said he would temporarily oversee the country’s oil portfolio following his dismissal of Mir-Kazemi (OGJ Online, May 16, 2011).
Iranian officials were quick to say that Ahmadinejad, as temporary minister of oil, would attend OPEC’s June 8 meeting and provide its keynote speech—a prospect that worried analysts who saw the Iranian president as using the opportunity to project himself onto the world stage in open confrontation.
However, those concerns eased a day after the decision of the Guardian Council when Ahmadinejad relented and said he would send a member of his cabinet to the OPEC meeting instead of going himself.
According to Cliff Kupchan, an Iran expert at consultants Eurasia Group, the decision of the Guardian Council means that Ahmadinejad has now been severely weakened and that Saudi Arabia will have a free hand in the upcoming OPEC meeting.
Kupchan said, “Ahmadinejad’s absence leaves Saudi Arabia free to conduct the agenda as it sees fit, without the distraction of this spotlight-grabbing leader.”
Ahmadinejad, visiting the Abadan refinery to underscore his nation’s ability to defy international sanctions, this week survived an explosion and fire at the facility that left 2 other people dead and 22 injured (OGJ Online, May 24, 2011).
Contact Eric Watkins at email@example.com.
Iran: 'OPEC will help cover global supply shortage'