August 5, 2008 - Iranian Oil Minister Gholamhossein Nozari said August 2 OPEC would discuss crude output control at its September 9 meeting in Vienna if oil prices remain on a downward trend, local media reported.
"If the oil price continues its downward trend, one of the topics in the next OPEC meeting will definitely be the issue of respecting quotas so that countries that have increased their (production) capacity are controlled," Nozari said, quoted by oil ministry news service Shana.
Saudi Arabia is the only OPEC country with any significant volume of spare capacity.
In May, oil minister Ali Naimi said the country would boost output by 300,000 b/d to 9.45 million b/d in July in response to customer demand.
A further boost was to take production to 9.7 million b/d in July.
Under OPEC's largely notional 29.673 million b/d output target, Saudi Arabia's allocation is 8.943 million b/d, 757,000 b/d below the planned July level.
"OPEC, as the responsible body for controlling the market, should be more careful to control the quotas and I think OPEC will pay special attention to this [at the next meeting]," the official news agency IRNA quoted Nozari as saying when asked about the possibility of OPEC agreeing to a cut on production.
"The issue is not about returning to [strict] quotas. The issue is that some countries which have oversupply should control their production," he added.
Crude futures hit record levels above $147/barrel in early July but have since fallen by more than $25/b, with the front-month light sweet crude contract on the New York Mercantile Exchange settling August 4 at $121.41/b, a loss of $3.69.
Qatari Oil Minister Abdullah al-Attiyah said OPEC would not let falling oil prices get out of control and was ready to act should supply overtake demand. "We will be ready to intervene in this regard. I believe that OPEC will not allow the market situation to deteriorate in such a dramatic or quick manner and if there is an increase in supply and a decrease in demand, I am sure OPEC will definitely intervene to correct this situation," he said August 1 in a interview with Al Jazeera television as monitored by the BBC.
"We will focus more on the supply and demand issue and will interfere when supply exceeds demand," Attiyah said.
Asked why oil prices had fallen so sharply in recent weeks, Attiyah said the fluctuation highlighted the role of speculators in determining price levels. "This indicates that the issue is not linked to the supply and demand principle, since there are sufficient quantities in the market," he said, adding that the current price fluctuations were "something strange and unprecedented" and were destabilizing the market.
OPEC members repeatedly have blamed market speculators, geopolitics and a weakening of the US dollar for the recent record price levels.
The price fluctuations, Attiyah added, were also making it "difficult at present to predict what will happen in oil markets."
He noted that some OPEC members had suggested prices could fall back below $100/b.
Attiyah said that despite the current high rices and a weak global economy he still expected an increase in demand over the winter.
"The demand for oil will continue, because the world is facing an energy crisis and there is enormous shortage of electric power supply, particularly in India and China," he said.
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