Opec not concerned by $100 crude price, says Iran minister

Agencies/Tehran

Iranian Oil Minister Massoud Mirkazemi at the news conference in Tehran, yesterday, where he said a new onshore gas field had been explored in the southern part of the country with 210bn cubic metres of recoverable gas

“The price of $100 for oil per barrel is real ... Opec does not need to hold an emergency meeting over the price issue,” Massoud Mirkazemi told a news conference.

Brent crude prices rose this week to around $98 a barrel, while US oil futures were at about $91, well above the $70 to $80 range that Opec’s top exporter Saudi Arabia says is comfortable for both producers and consumers.

One delegate from a Gulf Opec member state said on Thursday Opec could hold an emergency meeting if oil prices “exceed $100 and stay there”.

Libya, Ecuador and Venezuela have all said prices need to be higher to help producing nations maintain output.

“None of the Opec members find $100 concerning or irrational. Some of the Opec members see no need for an emergency meeting even with prices at $110 or $120,” Mirkazemi said.

Iran holds the rotating Opec presidency. The next scheduled Opec meeting is on June 2.

“None of the members have asked for an emergency meeting and I think for a long time there would be no such request,” Mirkazemi said.

Analysts are divided between those who see fundamental strength, as the world economy recovers, driving up fuel consumption, and those who focus on differences between today’s relatively well-supplied market and that of 2008, when oil prices raced to an all-time high of nearly $150 a barrel.

Meanwhile, , the chief executive of French oil major Total said yesterday that oil prices had risen too high, too quickly, but added that increased Opec output will not stem the rise as the climb is driven by demand.

“The world economy is just recovering,” Christophe de Margerie said ahead of an energy conference in the UAE capital,Abu Dhabi. “It would have been better for the prices not to go too high too quickly.

“The market is bullish because there is increasing demand in emerging markets ... it (demand) is higher than expected.”

Brent crude rose above $99 a barrel on Friday in New York, gaining 5.73% on the week. US crude oil for February delivery rose 14¢ to settle at $91.54 a barrel.

A Reuters poll last week showed US crude oil is expected to hit $100 a barrel in the first quarter, but a new record high above $147 is far less likely.

Asked whether Opec should raise production, de Margerie said that may not help curb rising prices.

“It’s difficult because there is no shortage of oil. Today, it is much more determined by the market,” he said, adding: “Too high oil would not be well received by consumers.”

And, Venezuela’s Energy Minister Rafael Ramirez has said rising oil prices are not threatening the global economic recovery and there is no need for an emergency Opec meeting to consider increasing supply.

Venezuela often calls for higher prices to maximise its revenue from a sector that is the linchpin of an economy that has diversified little from reliance on oil in the last century and has been battling recession for the last two years.

“The price is approaching the fair value of $100 per barrel,” Ramirez said, reiterating the stance of two other Opec members, Libya and Ecuador, which say prices need to be higher to help producing nations maintain output.

Analysts are divided between those who see fundamental strength as the world economy recovers, driving up fuel consumption, and those who focus on differences between today’s relatively well-supplied market and that of 2008, when oil prices raced to an all-time high of nearly $150 a barrel.

Opec often says it will act to address any supply shortages, but not to tackle price rises that it says are caused by speculators. The group’s Secretary General, Abdullah al-Badri, repeated that position on Saturday.

The group has held its supply target steady since a decision in December 2008 to implement a record cut in production levels of 4.2mn barrels per day (bpd) to bolster prices after the global financial crisis.

Ramirez said Venezuela, South America’s biggest crude producer, was not concerned by the current situation.

“We don’t think it (the price rise) impedes the recovery of the global economy,” he said. “Venezuela does not consider that an extraordinary or emergency Opec meeting is necessary.”

Ramirez also said Venezuela’s proven oil reserves had increased to 297bn barrels by the end of 2010, 41% higher than the year before.

Ramirez said the differential between Brent crude prices and US oil futures showed the need for a measurement based on a basket of currencies instead of just the US dollar.

“We have contracts that are linked to the Brent price. A currency basket for oil transactions is necessary for stability,” he said. “The spread shows the weakness of the dollar, which is a structural problem of the US economy.”

The spread between the two grades widened to as much as $7.66 this week, the widest premium the London grade has held to the US’ WTI prices since February 2009.

Strength in price, trading volumes and the market structure of Brent crude has helped lure some big investment money that typically favoured US oil futures – a trend that analysts say is likely to gather momentum.

Asked about US appeals that Venezuela stop doing business with Iran, Ramirez said no action would be taken as a result.

“We are sovereign,” the minister said. “They cannot dictate to us in this manner.”

President Hugo Chavez’s socialist government has actively sought to promote ties with fellow Opec member Iran, with which it shares a distaste for US global power.

Venezuela had said it was sending 20,000 bpd of gasoline to Iran – but that it had stopped in recent months because Tehran no longer needed the shipments.

Last month, Venezuelan lawmakers approved the creation of a joint venture between state oil company PDVSA and Iran’s Petropars Oil and Gas Co to develop an oil and gas field in the South American country.

Last month, Venezuelan lawmakers approved the creation of a joint venture between state oil company PDVSA and Iran’s Petropars Oil and Gas Co to develop an oil and gas field in the South American country.