DUBAI (Reuters) - OPEC will cut oil output again if the trend towards lower prices and slowing demand growth are unchanged when the group meets in December, Iran’s OPEC Governor Mohammad Ali Khatibi told Reuters on Sunday.
The credit crisis and economic slowdown could shave as much as 3 million barrels per day (bpd) from global crude demand, Khatibi said.
“If everything is the same and the trends continue like this then OPEC will have to do something,” Khatibi said in an interview by telephone.
“We have to balance the market. Recent indications are that demand could have fallen by 2 to 3 million barrels per day. Stocks are rising.”
Oil dipped below $60 a barrel last week, the lowest since March 2007, and has tumbled nearly 60 percent from its July peak over $147.
The Organization of the Petroleum Exporting Countries (OPEC) agreed at an emergency meeting on Oct. 24 to chop production by 1.5 million bpd, or around 5 percent, to halt the price slide, but the cut has had little effect to date.
OPEC President Chakib Khelil said on Saturday the producer group would probably move to cut again at its December meeting if prices stayed low and members had fully met their existing pledges to reduce supply.
Some members of OPEC would propose at the December meeting that the group look to maintain prices within a $20 range, Khatibi said.
That range could be either $70 to $90 per barrel or $80 to $100 per barrel, he added, declining to name the countries that would propose or support the price band or to say if Iran would support it.
Venezuela’s oil minister said last month it would propose OPEC adopt one of those two price bands. Venezuela has already proposed a further cut of another 1 million bpd in OPEC supply at the December meeting.
Current prices were too low to encourage investment in unconventional oil projects such as oil sands and in expensive conventional oil projects in the deep sea, Khatibi said.
“In the short-term the crisis is affecting demand,” Khatibi said. “But in the medium term this will affect supply. We need a price that will ensure we build capacity today to meet tomorrow’s demand.”
Iran’s plans to expand output were unaffected as it had neither deep sea nor unconventional projects, he said. “But if this continues, it will affect all producers, and Iran will be no exception”.
Oil companies are already reconsidering some projects that looked profitable when oil was higher.
Iran, the world’s fourth-largest oil producer, has cut around 200,000 bpd from output of around 4.04 million bpd in line with OPEC’s October agreement, an Iranian oil official said on Friday.
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