Iran says Opec will try to fill crude gap

A senior Iranian oil official has acknowledged there is a “shortage” in the global supply of crude and promised that Opec, the producers’ group, will keep the market in balance.

Mohammad Ali Khatibi, an Opec governor serving as Iran’s permanent representative to the organisation, offered a conciliatory assessment of the oil market on Wednesday.

Iran is foremost among Opec’s “hawks”, leading the group of member states who generally resist pressure to raise their output in response to higher prices.

But Mr Khatibi gave a different signal to the semi-official Mehr news agency in Tehran.

“Opec is trying to compensate part of the shortage of supply of crude and create a balance in the market, and in the future Opec will continue to do its onerous duty, which is to create ­balance in the market,” he said.

Iran, which holds Opec’s rotating presidency, will chair the next meeting of the cartel’s oil ministers on June 8 in Vienna.

The loss of Libyan output, which has been partially offset by higher production from Saudi Arabia, has reduced the total amount of oil provided by Opec by 1.3m barrels per day, according to the International Energy Agency.

The impact of this loss has been cushioned by the maintenance season for European refineries. But this period is coming to an end, heralding a rise in demand for crude oil over the summer.

Opec forecasts that the “call” on its members’ crude will climb by more than 2m b/d between the second and third quarters. At present, however, its total output is not projected to cover the increase, meaning that global inventories will be reduced by a predicted 1.1m b/d.

Analysts believe that this imbalance will widen later in the year, unless Opec decides to raise its production quotas. Johannes Benigni, the managing director of JBC Energy, a Vienna-based consultancy, calculated that Opec will need to increase its output limits by between 2m and 2.5m b/d in order to keep the market in balance.

But the next Opec meeting is expected to be more political than usual because the representation of two important countries – Iran and Libya – is still in doubt.

Mahmoud Ahmadi-Nejad, president of Iran, has sacked the oil minister, Masoud Mir-Kazemi, and appointed himself as “acting” replacement. Officials say that Mr Ahmadi-Nejad will not travel to Vienna for the ministerial meeting, but the identity of Iran’s representative, who will also chair the gathering, has yet to be disclosed.

Meanwhile, Shokri Ghanem, Libya’s oil minister, is understood to have left the country, amid reports that he has chosen to defect. Analysts believe that political divisions will make it difficult for Opec to achieve any consensus on raising output quotas.

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