Opec can do nothing to douse scorching oil prices when markets are already oversupplied by 2.8 million barrels per day (bpd) of crude, Iran's Opec governor said on Saturday.
Oil prices have raced to 21-year highs on the back of buoyant industrial demand in China, fears about Shia insurrection in Iraq and US refinery bottlenecks.
"Now there are more than 2.8 million bpd of crude more than demand," Hossein Kazempour Ardebili was quoted as saying on the Iranian Oil Ministry Web site.
"There is no reason for Opec members to increase production," he added. "This organisation is unable to do anything at present."
Iran is the cartel's second-biggest producer with an output capacity of around 4.2 million bpd. Analysts says Iran is pumping close to capacity and does not enjoy Saudi Arabia's ability to open the taps in a bid to cool prices.
"It seems that prices will continue to go up without taking into consideration the basic elements of the market, supply and demand," he said.
"The current trend of prices stems from political and military developments.
NYMEX September crude futures closed at a scorching $46.58 on Friday, after touching yet another record high of $46.65.
But Kazempour reiterated that oil prices could still crash if security returned to the oversupplied market.
"If a calm political and military situation prevails in the market, the amount added to crude reserves will pressure the price," he continued.
Yet the fighting in Iraq has intensified over the past week and a total of about 90 insurgents had been killed in the northern town of Samarra and the southern city of Hilla on Friday and Saturday.
Fears that a rebel militia could strike Iraqi infrastructure also forced authorities to stop oil export flow from the main pipeline in southern Iraq, an oil official said on Saturday.
Analysts said concerns over disruptions to global oil supply could drive up prices to $47 a barrel soon, before heading for $50.
Comments
Comments are closed.