OPEC Should Take Action to Check Price Slide

OPEC Should Take Action to Check Price Slide
OPEC Should Take Action to Check Price Slide

Iran's former representative in the Organization of the Petroleum Exporting Countries (OPEC) called on OPEC to take action against falling oil prices, Fars news agency reported.

Seyyed Mohammad Ali Khatibi said, "Prices are steadily falling and OPEC members cannot afford to wait until next month's meeting. Every delay translates into more loss."

Many members expect Iran to step forward, and will sanction a move to regulate the prices, he said.

Oil prices are not only worrisome for oil exporters, but have also become a concern for gas exporters, as prices affect the value of many gas export deals.

In normal times, OPEC's main responsibility is determining the production ceilings but it needs to take measures at times like this when prices have fallen, according to Khatibi.

OPEC should control the oil supply, regulate prices and rebalance the global market by adopting effective policies.

He stressed that the interests of oil and gas exporting countries have been jeopardized and OPEC needs to step up and take action. It is specified in OPEC's charter that the organization must protect the interests of all members.

"We cannot wait for oil prices to be regulated on their own. We cannot hope for market to regulate without taking measures.

Saudi Arabia has increased oil supply from 8 million barrels to 10 million a day and much of the oil surplus in the market is due to Saudi oversupply.

"Some argue that Riyadh has political intentions, but I cannot speak for sure, because every claim should be supported by concrete facts. In fact, the price drop is to the detriment of the Saudis as well, because the country's income from oil exports has plunged by 200 percent."

A handful of countries have reduced the market share of other oil producers by increasing the production.

He asserted that remaining idle in the present situation will be to the benefit of big oil consumers whose economies face recession.

The global price of oil was relatively stable for nearly four years, averaging $110 per barrel. Increased production in the US, Canada, Iraq and elsewhere made up for declining supplies in nations such as Iran and Libya, and helped meet rising global demand.

That delicate balance has been upended by a weaker global economy. Demand is slowing while production, particularly in the United States, continues to surge.

The global price of oil closed at $84.47 per barrel Thursday, down about $31, or 27 percent, from its high point for the year.

Oil consumption globally is 91 million barrels per day. That means the world's oil producing countries and companies are bringing in as much as $2.8 billion less in revenue every day.