Iran Worried by Falling Oil Demand

DUBAI — Iran is concerned that the deepening global financial crisis is having a bigger impact on oil demand growth than previously expected, the Islamic Republic’s OPEC governor said on Tuesday.

By (Reuters)

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Published: Wed 8 Oct 2008, 10:56 PM

Last updated: Sun 5 Apr 2015, 2:13 PM

It was too early to say if the Organization of the Petroleum Exporting Countries (Opec) would have to cut production at its December meeting to match lower demand growth, Muhammad Ali Khatibi told Reuters in an interview.

“We are worried about demand,” Khatibi said.

“The financial crisis is deeper than we expected and this is definitely influencing world oil demand.”

Opec, source of more than a third of the world’s oil, may have to revise down its forecast for demand growth of around 900,000 barrels per day (bpd) in 2009, he said.

Fellow Opec member Ecuador said on Monday that the group would analyse the impact of the crisis on demand and set production levels accordingly.

To date, Iran has noticed no slackening in demand for its crude from Asia, Khatibi said.

“These financial problems seem to be spreading, but Asia remains the engine of oil demand growth and we haven’t yet seen any indication that demand has been influenced,” Khatibi said.

There were no moves among Opec members to hold an emergency meeting before December, Khatibi said. US oil fell to an eight-month low on Monday of $87.56 on concern that the world economy would fall into recession.

Iran’s oil minister said on Saturday that a price of oil below $100 was unsuitable for both consumers and producers.

Stronger Dollar

The stronger US dollar was cushioning the impact on oil producers of falling prices, Khatibi said, when asked if the oil price was too low.

The dollar hit a 13-month high against the euro and yen on Monday, boosting the purchasing power for oil exporters whose market is denominated in the US currency.

A reduction in Opec oil supply in September has helped balance the markets and should continue to do so through October, he said.

Opec cut oil supply about 300,000 bpd in September from August, the first monthly decline since April, a Reuters survey found.

The producer group was pumping above its target and agreed in a meeting last month to comply more strictly with its formal output target.

Tight supplies of refined oil products in the United States could help support crude prices in the fourth quarter, Khatibi said.

“The product market is strong, maybe it will be the next thing that lifts crude, with winter demand,” he added.

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