IRAN & OPEC: STOP PRICES
Iran's oil minister called on Opec nations to work together to prevent a further slide in crude prices, highlighting the split among members of the cartel over how to react to the sharp drop in oil to two-year lows in recent weeks.
"Opec members should make efforts to offset their production to keep the prices from further instability," said Bijan Namdar Zanganeh on Friday, according to the Iranian oil ministry website, Shana.
ICE November Brent traded 20 cents lower at $96.88 in afternoon trading with the international oil benchmark on target for its third weekly loss. Brent has fallen more than 15 per cent since mid-June.
Oversupply in the North Sea and Atlantic Basin has coincided with greater North American production.
Meanwhile, sustained output from Iraq and rising Libyan production – despite bloodshed in both countries – has weighed on the Brent price as has weaker demand from Europe and China.
This month, both the International Energy Agency – the wealthy nations' energy watchdog – and Opec lowered projections of crude demand next year.
This has fostered speculation of a cut in the oil cartel's output targets, in defence of the key $100 a barrel price level.
But Saudi oil minister Ali al-Naimi last week sought to calm anxieties amid the recent oil price falls.
Suhail bin Mohammed al-Mazroui, oil minister for the UAE, said it was still too early to decide whether Opec should lower output ahead of its November meeting.
Bhushan Bahree, oil analyst at IHS Energy, said Iran needed higher oil prices more urgently for its budgetary needs than other countries in the region such as Saudi Arabia, Kuwait, the UAE or Qatar.
Estimates of fiscal breakeven oil prices for this year – the price at which the budget is balanced – vary across Gulf nations.
Iran's stands at about $130 a barrel while Saudi Arabia is at $89 and the UAE at $74, according to data compiled by Citigroup.
Although some of these countries are able to tolerate much lower oil prices, they would still prefer them to stay closer to the $100 a barrel mark as their economies are so dependent on oil revenues.
"Iran is also shut out off international capital markets and does have not have easy access to debt finance like the Gulf countries," said Eckart Woertz, a Gulf economies expert and senior research fellow at the Barcelona Centre for International Affairs.
He added: "As there is a pronounced rivalry between Saudi Arabia and Iran for regional hegemony, Saudi Arabia might see some geopolitical advantages in the current situation as its rival cannot stomach lower oil prices that easily."
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