Iran: No need for OPEC to increase production

Posted Jan 29th 2008 2:42PM by Joseph Lazzaro
Filed under: International Markets, Oil

Iran's Oil Minister Gholam-Hossein Nozari said Tuesday that there's no reason for OPEC states to increases oil production, PressTV Iran reported.

"There is no reason for the Organization of Petroleum Exporting Countries (OPEC) to raise output as we are approaching the warm season," Nozari noted ahead of OPEC's meeting in Vienna on Friday, February 1.

The West, including the United States, has stepped up pressure on OPEC members to increase oil production to combat persistently high energy prices that many economists believe have slowed the U.S. and global economies. OPEC supplies about 40% of the world's oil.

Oil prices were little-affected by Nozari's comments. Oil fell 20 cents to $90.79 per barrel in mid-day Tuesday trading. Heating oil declined about 1 cent to $2.52 per gallon, unleaded gasoline fell 1 cent to $2.31, and natural gas declined 5 cents to $8.04 per million BTUs.

The key: Saudi Arabia

Independent energy trader Jim Dietz said Nozari's comments were not a surprise, given Iran's historically hawkish stance.

"Iran rarely favors anything that takes the pressure off oil's price, whether the global economy is strong or weak," Dietz said. "The key to OPEC, as always, will be what Saudi Arabia does, as they set the tone and have the largest production capacity, and spare capacity. As we say in the energy trading markets, 'As the Saudi's go, so goes OPEC.' "

Dietz said he has no daily trades open today, but has maintained his monthly oil short trades. He added that a slightly-milder-than-normal winter to-date has combined with slowing U.S. consumer demand increases in oil and gasoline to take pressure of the energy markets, at least for now.

As a result, Dietz said the oil market Tuesday maintained its "offer" or sell tone. Dietz sees oil testing $75-$80 per barrel and unleaded gasoline testing $2.75-$2.80 per gallon by early spring.

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