DUBAI (Reuters) – It is still too early to say whether OPEC needs to reduce oil output again in December as the impact of financial market turmoil on oil demand is unclear, Iran’s OPEC governor said on Wednesday.
Members of the Organization of the Petroleum Exporting Countries (OPEC) last week agreed to rein in output that was above the group’s target, cutting supply by 520,000 barrels per day. U.S. oil has since fallen below $100 to a seven-month low.
“It is too early to judge,” Iran’s OPEC Governor Muhammad Ali Khatibi told Reuters. “Demand is a key issue and signals from the economy in the United States are not good. But I hope demand will recover.”
Khatibi said ahead of OPEC’s meeting last week that the producer group may need to consider a cut to balance markets at its meeting in Algeria on December 17.
All members should abide by the group’s decision last week to pump at output targets, Khatibi said.
“That was a unanimous decision and all members should stick to their targets,” he said.
Any reduction would come primarily from OPEC’s most influential member Saudi Arabia, which produces most of the additional barrels above OPEC’s agreed target.
But concern about the effect of high fuel prices on the economies of leading energy consumer the United States and other big oil buyers could prevent Saudi from cutting.
Saudi-owned Al Hayat newspaper said in an unsourced report last week that the kingdom had no intention of reducing output as it was committed to meeting demand for its crude.
Iran was pumping at about its target, Khatibi said, although he declined to give more details on either the Islamic Republic’s output or its OPEC target.
Iran has disputed its previous OPEC targets.
The world’s fourth-largest exporter was shipping around 2.5 million barrels per day (bpd) to global markets, Khatibi said.