OPEC Emergency Meet Would Be Premature, Officials Say

By Ayesha Daya and Maher Chmaytelli

Sept. 16 (Bloomberg) -- OPEC needs to study the effects of its production cuts before considering an emergency meeting, oil officials from Iran and Libya said as prices fell to a seven-month low near $90 a barrel.

``Ministers need at least September and October data to see the impact of OPEC's decision on the market,'' Mohammad Ali Khatibi, Iran's OPEC governor, told Bloomberg in a phone interview from Tehran today. ``We cannot be in a hurry -- an emergency meeting would be a judgment in a rush.''

The Organization of Petroleum Exporting Countries urged members to adhere more strictly to production quotas at its meeting in Vienna last week. Oil has plunged 38 percent from its July record on concern the deepening credit crisis will weaken global economic growth, cutting demand. Iran is traditionally among the most active OPEC members in urging action to defend prices.

``The main reason for the price decline is the poor performance of the world economy, particularly in industrialized countries,'' Khatibi said. ``That is affecting oil demand. The International Energy Agency, the Energy Information Administration, all have revised oil demand downward.''

Crude oil for October delivery declined as much as $5.16, or 5.4 percent, to $90.55 a barrel, the lowest intraday price since Feb. 8. It was at $91.98 at 1:38 p.m. London time on the New York Mercantile Exchange.



`Very Concerned'

``We are very concerned. It's a huge drop,'' Libya's top oil official Shokri Ghanem said today in a phone interview from Tripoli, commenting on the falling oil prices.

OPEC agreed at its meeting in Vienna to a total limit for 11 members of 28.8 million barrels a day. That's 465,000 barrels a day lower than production from those 11 in August, according to secondary estimates published in an OPEC monthly report today.

``It will take more than a month for the impact of the cut to be felt, so let's wait and see,'' Libya's Ghanem said, when asked if further action by OPEC was needed.

Most of OPEC's extra pumping in the past few months has come from Saudi Arabia, the world's largest oil producer, which pledged to raise output by about 500,000 barrels a day in June and July, to calm markets.

The group ``will take action if they see continue pressure for prices to fall below $80,'' John Sfakianakis, chief economist at Saudi British Bank, said today in an interview in London. ``I think they are more than fine if prices stay around $80-$90 in the next few months.''

Lower Demand

OPEC, which supplies more than 40 percent of the world's oil, lowered its forecast for demand this year by 120,000 barrels a day as the global economic slowdown cuts fuel consumption, according to the oil market report.

The 13-member group reduced its forecast for average oil consumption next year to 87.66 million barrels a day, compared with an estimate last month of 87.80 million barrels.

``The economic slowdown is now spreading beyond the U.S. to Europe and Japan with contagion risks to other regions,'' the report said. ``The weakening economic situation has been reflected in a slowdown in world oil demand growth.''

Last week, the International Energy Agency, an adviser to 27 nations, cut its forecast for global oil demand in 2008 and 2009.

Iran Production

Iran doesn't need to cut any production because it is producing at its quota level, Khatibi said. ``As far as I know, Iran was producing around its commitment,'' he said.

The country, OPEC's second-largest member, produced 4.08 million barrels a day of crude oil last month, according to Bloomberg estimates. Its quota is 3.8 million barrels a day.

Libya, whose output target is 1.7 million barrels a day, produced 1.63 million barrels a day last month, according Bloomberg estimates.

OPEC is scheduled to meet on Dec. 17 in Oran, Algeria.

To contact the reporters on this story: Ayesha Daya in Dubai adaya1@bloomberg.netMaher Chmaytelli in Nicosia at mchmaytelli@bloomberg.net