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Iran OPEC governor says risk of oil oversuppply if output rises
Published on November 6, 2009 by oilprices · No CommentsIran’s OPEC governor warned on Thursday that any decision to increase oil output may jeopardise a current balance between oil demand and supply. “Now the market is balanced. But any change from the supply side can change the balance,” Mohammad Ali Khatibi told Dow Jones Newswires.
It comes after OPEC Secretary General Abdalla Salem El-Badri said last month that increasing output quotas was possible if certain conditions, such as recovering demand and economy, and falling oil inventories are met. If OPEC decides to increase output quotas under current market predictions, “again the market will be oversupplied,” Khatibi said. “There will be pressure on the price side.”
The group’s members only produced 3,000 barrels a day more than demand for their oil in the third quarter, based on OPEC’s latest report published in October. But Khatibi pointed that demand for OPEC crude in the first quarter and second quarter of next year is expected to be lower than in the fourth quarter of 2009. He also said demand for OPEC oil in the first quarter will be less than its latest production average.
Consumption of OPEC oil in the first quarter of 2010 is expected to reach 27.96 million barrels a day, which compares with an output of 28.83 million barrels a day in the third quarter of 2009. The production numbers are based on secondary sources.
“If there is no higher demand compared with production, there is no reason to increase production,” he said. Under this scenario, “any increase (in output) will bring crude to stocks,” he said.