Iranian Oil Minister Asks OPEC Special Meeting with Falling Oil Prices

Rostam Qasemi, the Oil Minister of Iran, asked OPEC’s secretary general to seek a special meeting in the midst of declining current crude oil prices, according to SHANA, the website of the oil ministry of Iran.

Qasmi told SHANA that, during OPEC’s 161st meeting, they agreed that oil prices dropping below $100 a barrel indicates a crisis. Because of that, he has called on OPEC to be ready to hold an emergency meeting.

Brent and U.S. oil prices per barrel posted their largest declines in a quarter since the last quarter of 2008. The drop was caused by poor demand, high supply and economic concerns.

But current crude oil prices bounced back in the latter parts of Friday because of the agreement between the leaders of Europe to shore up banks in the euro zone. Brent crude prices increased by over $6 per barrel to end at $98. Meanwhile, U.S. crude oil prices per barrel rose by over $7 barrel to finish at a level that is slightly lower than $85.

Qasemi cautioned that if the members of the OPEC won’t follow the agreed output limit of 30 million barrels per day, the oil market’s balance will be disrupted. The view of Qasemi reflected similar recent comments of Venezuela and Iraq.

Hussain al-Shahristani, the Deputy Minister of Iraq, recently said that OPEC has to reduce its supply while Rafael Ramirez, the Energy Minister of Venezuela, also asked for a special meeting in quarter three of this year in case crude prices all over the world stay low.

During its recent meeting, OPEC agreed to stick to the collective limit which implies a reduction of 1.6 million barrels per day from the total supply of 31.5 million from the 12 members. To achieve that, a sharp decrease is needed from Saudi Arabia.

However, Saudi Arabia is still not showing any signs of altering its policy of producing closer to its highest level in many years to support the growth of the global economy, in spite of crude prices reaching a level below the $90 per barrel, which is a first time in almost 1 year and a half.

By: Chris Termeer