Leadership (Abuja)
Betrand Nwankwo
7 September 2008
Oil prices fell below $105 at the weekend on concerns over slowing energy demand and a strong US currency, even as the market await next week's OPEC meeting on crude output levels.
However, Iran's Oil Minister, Gholamhossein Nozari, has said that continued fall in crude prices would harm producers
Earlier last week, the minister of $100 a barrel was the lowest appropriate price. Crude has tumbled from a record $147 in July and was trading on Friday at below $107.
"If the reducing trend in prices continues like now, the producers will be harmed," Nozari told Shana, making clear that this was because production costs had not fallen.
In the run-up to the September 9 meeting of the Organisation of the Petroleum Exporting Countries (OPEC), Iranian oil officials have said OPEC members should cut output to their agreed targets so that oversupply on the market was reduced.
Iran's OPEC governor, Mohammad Ali Khatibi, last week told Reuters, that OPEC may need to cut oil supplies by as much as 1.5 million barrels per day, or nearly 5 per cent, to balance global markets by early next year.
Iran is traditionally hawkish on price. Another price hawk, Venezuela, said record prices near $150 were "irrational" and that they would probably settle around $100.
OPEC does not officially have quotas, but the term is sometimes used to describe agreed output targets for each member country. Some, notably Saudi Arabia, have been producing above these targets.
. Nozari told oil ministry website, Shana, on Saturday, that his country wanted a "fair" crude price but did not elaborate.
Brent North Sea crude for delivery in October, dropped 97 cents to $105.33 a barrel in electronic deals after slipping under $105 earlier in the day.
New York's main contract, light sweet crude for October, fell 96 cents to $106.93 a barrel in pit trading.
"Crude prices featured on the downside on persistent concerns over weakening oil demand and as the US dollar continued to appreciate," said Nimit Khamar, an analyst at the Sucden brokerage in London.
"The outlook for global economies is looking far from rosy, and is fuelling concerns over demand destruction and pushing oil prices lower.
"OPEC is set to meet on 9th September (Tuesday), with many market participants expecting it to reduce production to prevent over supply," Khamar added.
OPEC member, Libya, said at weekend that the oil market was starting to suffer from oversupply.
"The market is well served and has even started to suffer from oversupply," said Libya's Oil Minister Shukri Ghanem.
"Brent crude had gone down nearly $2 on Thursday as the dollar began strengthening against the euro on eurozone economic woes, while the market shrugged off a larger-than-expected decline in US energy stockpiles", dealers said.
The dollar also found support in a survey by the Institute for Supply Management, showing US service sector activity rebounded unexpectedly in August.
Many analysts expect oil prices to continue to fall because of fears of recession in the United States and Europe.
Crude oil, which hit a record as high as $147.27 in July 11, 2008 in New York, has lost nearly $40 in less than two months.
Oil prices had broken through $100 a barrel for the first time at the start of January on geo-political concerns, notably surrounding the ongoing nuclear power dispute between the West and Iran, which is a major producer and exporter of crude oil.
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