Iran sees oil supply crisis ahead; says $100/b oil "natural"
Dubai (Platts)--7Dec2010/656 am EST/1156 GMT
Iran's OPEC governor said Tuesday that oil prices at $100/barrel in
the short term seemed "completely natural," warning that the world faced
a looming oil supply crisis because of production declines of up to 10%
from producing fields.
"A crisis of unreliable oil supply in the world's markets is close,"
Mohammad Ali Khatibi was quoted as saying by the semi-official Mehr news
agency.
"Predictions about a global [oil] production fall on one side, and a
decrease in the production of non-OPEC producers in coming years have
caused concern about the security of energy supply in the world,"
Khatibi said.
He estimated that oil production globally would decline by 5-10% in
coming years.
"In recent years, some non-OPEC producers have always oversupplied the
market. This oversupply will become impossible in the next few years due
to production decline," he said.
The era of cheap oil was over, he said, adding that current oil prices
were unrealistic when compared with historic prices and a higher oil
price was needed to guarantee investment in new capacity, "which is one
of the solutions for supply security."
"Oil prices at $100 in the short term seem completely natural," Khatibi
said.
Iran is OPEC's second largest exporter after Saudi Arabia but its oil
reservoirs suffer from higher than average decline rates because of the
country's inability in recent years to attract enough investment and
import modern technology to raise production capacity beyond current
levels.
Analysts believe that Iran cannot sustain production much beyond 4
million b/d or even less. Iran is producing 3.69 million b/d, according
to the latest Platts survey of OPEC's output for November. -Staff,
newsdesk@platts.com
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