With OPEC members having got used to high oil prices, at least one of them – Iran – is pushing for the producers’ cartel to cut output in order to keep the cost of oil above $40 a barrel. The Organisation of Petroleum Exporting Countries is due to meet at the end of January to consider cuts to prevent prices falling as winter ends.
Iran’s oil minister Bijan Zanganeh said the market is oversupplied and he added: “We should be very concerned about it, action is needed.” OPEC is no longer the dominant force it once was, but is still responsible for nearly 30 million barrels of the world’s daily output while non OPEC members put out almost 50 million barrels. The rise in the price of oil this past week, with US light crude and Brent increasing by 5% on Thursday alone, is partly due to comments by cartel members as well as insurgency in the run up to the Iraqi elections. OPEC, and particularly the largest supplier Saudi Arabia, faces a dilemma. If it cuts output further then prices go up again and the oil producers will be accused of hindering world economic growth.