Iran’s oil minister on Wednesday questioned the need for OPEC to hike production to cool surging oil prices, snubbing calls for more crude from its Western foes, the US and Britain.
Crude hit a record high of $114.08 a barrel on Tuesday. “Why should OPEC try to lower prices? ... Let America and Britain continue demanding,” Oil Minister Gholamhossein Nozari told reporters on the sidelines of a conference in Tehran, when asked about the calls from consumers for OPEC to act.
British Prime Minister Gordon Brown on Tuesday urged producers to open the taps to counter high prices, echoing a call by the United States. Washington and London are embroiled in a row with Iran over its nuclear program, which they believe is aimed at building nuclear weapons despite Tehran’s insistence that its goal is generating electricity. Nozari, who heads the oil industry in OPEC’s second biggest producer, described the current price as “suitable” and blamed factors like the weak US dollar for the price surge. “Oil supply is more than demand in the market but because of other factors including the US dollar losing its value, the price of oil is going up,” Nozari said. The Organization of the Petroleum Exporting Countries has also said there is no shortage of supply. As well as a weak dollar, it points to issues like speculative trading and political tensions for price rises.
Nozari also said he saw no reason for an exceptional meeting by OPEC because the group had no power to act in a market where demand and supply were not the driving forces. “I don’t think there is a need for an extraordinary meeting to discuss the level of production or the current prices,” Nozari said.
OPEC ministers last met for their regular talks in March and are due to meet again on September 9 in Vienna. In its bid to isolate Iran, the US has long imposed sanctions, that target the Islamic Republic’s oil industry and other areas. It has also been urging foreign firms to steer clear of the Islamic Republic. Nozari said sanctions on Iran were not deterring investors or hampering the country’s oil industry. “Sanctions and threats are old, dull and ineffective instruments for Iran’s oil industry,” he said in a speech to the conference. “Foreign companies are still coming to invest in Iran.”
Industry experts say many Western firms are increasingly reluctant to invest or expand work in Iran, but say Asian firms including from China have been signing up to energy projects. The experts say, Iran needs foreign investment and accompanying expertise to substantially expand output from the current level, which Iranian officials have put at about 4.2 million barrels per day. The UN Security Council has also slapped sanctions on Iran because of the nuclear row. Those UN measures are not aimed at the oil sector but analysts say, the standoff is adding to the concerns of Western companies about investing. (Reuters)