Iran backs OPEC increase
Scotsman.com
May 17th 2004
James Dow
IRAN yesterday gave its guarded support to Saudi Arabia’s call for OPEC to increase its oil production ceiling by 1.5 million barrels per day.
But Hossein Kazempour Ardebili, Iran’s OPEC governor, went on to warn that the hike might not be enough to bring markets down from the record $40-plus crude prices reached last week. The prices have provoked fears of rising global inflation.
Iran is OPEC’s second biggest oil producer, so the addition of its voice to that of top producer Saudi Arabia is likely to be welcomed by nervous markets as trade resumes today.
Kazempour said: "A possible increase of OPEC production by 1.5 million bpd would display the organisation’s co-operation and understanding with consumers, even though OPEC is not responsible for the situation."
But he pointed out that markets are well aware the cartel’s producers are already pumping in excess of the official 23.5 million bpd limit.
"Whatever agreement is reached on raising the OPEC production ceiling, or quotas, would in practice be a formalisation of the presently available surplus in the market, [which is] fully evident in the consumer countries’ rising level of stockpiling," he said.
The market highs, he continued, were driven not by a lack of OPEC production but the twin fears of attacks on Middle East oil infrastructure and bottlenecks at US refineries.
If those problems eased, an increase in crude exports at the cartel’s next meeting, on 3 June, could end up pushing prices down. "We are still concerned about the trend of crude oil stockpiling by the consumer countries ... that may push prices down as we enter autumn," he said.
OPEC will discuss the Saudi proposal at the International Energy Forum in Amsterdam, starting on Friday.
http://business.scotsman.com/index.cfm?id=559982004