Key OPEC producer Iran gave guarded support yesterday to a Saudi call to raise OPEC supplies by 1.5 million barrels daily to appease consumers, but cautioned that oversupply could deflate oil prices towards autumn.
Saudi Arabia, OPEC's leading producer, last week called on the exporters' group to boost its output ceiling by a minimum 1.5 million barrels per day (bpd) to prevent oil prices, now at 21-year highs, from derailing world economic growth.
"A possible increase of OPEC production by 1.5 million barrels per day would display the organisation's co-operation and understanding with consumers even though OPEC is not responsible for the situation," Iran's OPEC governor Hossein Kazempour Ardebili said on the state oil company's website.
The official from Iran, OPEC's second biggest producer, said Tehran was concerned that growing global oil inventories would pressure prices towards the end of the third quarter.
Kazempour said the proposed 1.5 million bpd increase in OPEC's output ceiling would only legitimise current leakage over official cartel supply limits.
"Secondary sources" that regularly monitor output from the Organisation of the Petroleum Exporting Countries say the producers are pumping more than 1.5 million bpd over their formal 23.5 million bpd output quotas, he said.
"Whatever agreement is reached on raising the OPEC production ceiling, or quotas, would in practice be a formalisation of the presently available surplus in the market, fully evident in the consumer countries' rising level of stockpiling," said Kazempour.
OPEC is due to discuss Riyadh's proposal at the International Energy Forum in Amsterdam on May 22nd-24th. Policy would be finalised at a cartel meeting set for June 3rd in Beirut.
Of the 11-member producers' group, only Venezuela, a top supplier of crude and products to the US, has publicly rejected the Saudi call to raise output.
"When we compare prices, we can see that the price of oil has been very low in the last 20 years. We maintain the position... that it is not necessary to increase production," Venezuelan President Hugo Chavez said.
