Opec credibility at risk if members act alone: Iran

Opec's credibility is at risk and oil prices may collapse if members of the group unilaterally decide to increase output, Iran's Opec governor warned. "Given the market situation, if every Opec member decides to act of their own this would damage the credibility of Opec and their own interest," Mohammad Ali Khatibi said in a telephone interview on Sunday.
"For now increasing production might be attractive because of the high oil price, but if the price collapses this will hurt individual countries as well as Opec as a group," he added. In its latest monthly report, the Organisation of the Petroleum Exporting Countries said February output rose 110,000 barrels per day (bpd), the highest level since December 2008 when the group agreed a record cut in output, to 30.02 million bpd due to extra supplies from Saudi Arabia.
Since political unrest surfaced in Opec-member Libya, more than halving the North African producer's oil output, top oil exporter Saudi Arabia had promised to meet any supply gap.
The kingdom is now pumping around 9 million bpd and has a spare capacity of 3.5 million bpd.
This year Iran's oil minister Massoud Mirkazemi is holding the rotating presidency of Opec, and would be the one to call for an extraordinary meeting if needed. On Saturday, Mirkazemi advised Opec members that boosting production without a group consensus would not help ease rising oil prices caused by unrest in Libya.
"We are a group and if there is any need we have to act together. As Iran is president of the group this year we are reminding members that we need to act collectively," Khatibi said.
Nonetheless, Iran has favoured oil prices of $100 a barrel or higher as it grapples with major spending plans.
In the coming week, UN-sanctioned aerial and naval attacks on Libyan air defence and ground forces over the weekend could see oil prices jump higher. On Friday, Brent crude closed at $113.93 a barrel, while US crude closed at $101.42.
"On the long run if Opec doesn't act as a group, individual countries and members of Opec will end up losing revenues," said Khatibi. Oil prices hit a record high above $147 a barrel in July 2008, but Opec producers have fresh memories of how quickly they plunged from those levels to lows near $33 a barrel six months later as the global economy fell into a tailspin. For the time being a number of Gulf-Opec members believe there is no need for an extraordinary meeting, Khatibi agreed. "As far as I know the market is well balanced and there is no sign of having an extraordinary meeting," he said.