Iran, OPEC’s second-biggest producer, has written to the group’s president requesting that members hold an emergency meeting to discuss recent falling prices, the country’s OPEC Governor Mohammad Ali Khatibi said.
Kuwait said it’s not aware of any plan for an emergency gathering. The Organization of Petroleum Exporting Countries met less than three weeks ago on June 14 in Vienna, and agreed to maintain its current production ceiling. Since then, Brent crude dipped below $90 a barrel on June 21 for the first time since 2010, before rallying back to $97.80 at the end of last week.
“Our minister has sent an official letter requesting the president to start consultations about an extraordinary meeting,” Iran’s Khatibi said in a phone interview from Tehran Monday. “Whenever the president receives a demand, it is his responsibility to start consultations, and we hope that he will do so soon.”
Brent, a benchmark for more than half the world’s oil, dropped 20 percent last quarter, the biggest decline since the final three months of 2008, as the Europe’s debt crisis threatened energy demand. Brent settled 7 percent higher at $97.80 on June 29, the last trading day of the second quarter, after European leaders agreed to ease repayment rules for emergency loans to Spanish banks and relax conditions on help for Italy. The rally also occurred on the last trading day before European Union sanctions banning the importation of Iranian oil took full effect Sunday.
“If you see the downward trend of oil prices it makes you feel you should be careful,” Khatibi said. “Oil below $100 is not acceptable.”
Kuwait, OPEC’s fourth-largest member, hasn’t been contacted about an emergency gathering and seeks a “stable, well-supplied” oil market, Oil Minister Hani Hussain said Monday.
Any extraordinary meeting would need “to be looked into carefully,” in case oil “drops and rises up again,” Hussain said.
Brent crude rose as high as $128.40 on March 1 and fell as low as $88.49 on June 22. The August Brent contract traded at $96.31 a barrel on the ICE Futures Europe exchange at 3:59 p.m. London time Monday.
OPEC, responsible for 40 percent of global supplies, resolved to constrain output at its June 14 meeting because of “mounting” downside risks to the global economy and accumulating inventories. The group aims to pare back output to its official ceiling of 30 million barrels a day from May’s actual production level of 31.6 million barrels a day, according to Secretary-General Abdalla El-Badri.
Saudi Arabian Oil Minister Ali al-Naimi said the following day that his country will ensure that global markets remain adequately supplied.
The position of OPEC president, a role that rotates annually between the group’s 12 members, is currently held by Iraqi Oil Minister Abdul Kareem al-Luaibi. Within OPEC, Iran and Iraq, with majority Shiite populations, have become closer allies, while the Gulf Sunni monarchies Kuwait, Qatar, the UAE and Saudi Arabia usually unite.
“Discussion of an emergency OPEC meeting is symptomatic of market conditions, in that current price levels are not enough as members need more and more year after year,” Eugen Weinberg, the head of commodities research at Commerzbank AG in Frankfurt, said Monday. “The members calling for a meeting will not cut by themselves, but they will put pressure on the Saudis to cut. It’s only wording for now but the signal has been sent.”
Algeria’s oil minister said Sunday that OPEC will hold a special meeting if crude prices continue to slide.
“It was agreed at the last OPEC meeting that if the deterioration of the oil market reaches a certain limit, an extraordinary conference will be convening to consider ways and means to correct the imbalances,” Youcef Yousfi told reporters in Algiers.