Iran Economy NewsIran says Saudi crude increase will not change market

Iran says Saudi crude increase will not change market

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Reuters: An increase in crude output by Saudi Arabia will not change market conditions as demand is for lighter oil than it provides, Iran’s OPEC governor was on Saturday quoted as saying, reiterating Tehran’s stance that there is no need to boost production.
TEHRAN, June 11 (Reuters) – An increase in crude output by Saudi Arabia will not change market conditions as demand is for lighter oil than it provides, Iran’s OPEC governor was on Saturday quoted as saying, reiterating Tehran’s stance that there is no need to boost production.

At a meeting in Vienna this week, OPEC failed to agree on an increase in production, which consuming countries wanted and which leading exporter Saudi Arabia pushed for, because other producers, including Iran, said they feared prices could tumble.

Saudi Arabia will raise output to 10 million barrels per day in July from 8.8 million bpd in May, Saudi newspaper al-Hayat reported on Friday, as Riyadh proceeds outside official OPEC policy.

Mohammad Ali Khatibi told the Iran newspaper that the three countries that supported an output increase — Saudi Arabia, Kuwait and the United Arab Emirates — had done so under U.S. pressure.

“There is currently absolutely no shortage in the market, and consequently there is no need to raise production,” he said. “Raising supply in the absence of demand would amount to an interference in the market flow.”

“These three countries can only raise the production of heavy and sour oils, while the market will only absorb increased production if it is of light category as there is no demand for heavy oil in the market.

“The absorption of heavy oil as feedstock by refining establishments would require a change in the refining mode and investment which is costly and time consuming and something which they won’t do. They (the market) are awaiting the return of Libya’s crude of (the) light category,” Khatibi said.

Iran, which holds the rotating presidency of OPEC, has suggested holding an emergency meeting before the group is due to meet again in Vienna in December.

(Reporting by Hashem Kalantari; writing by Robin Pomeroy; editing by Patrick Graham)

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