Iran Expects OPEC Supply Cut as Heavy Oil Demand Weak

(Bloomberg) — The Organization of Petroleum Exporting Countries will eventually have to cut production of lower-quality crude as warmer weather in the northern hemisphere reduces demand for oil, Iran’s OPEC governor said today.

“If OPEC isn’t cutting production officially, they will do it in secret because the price is so high” and supply cuts would not be popular with consuming nations, Hossein Kazempour Ardebili said in a phone interview from Tehran. “Cuts will start on a voluntary basis, and will have to become formalized once secondary sources make the numbers clear.”


Iran’s crude oils include some of the heaviest and most sulfurous grades sold internationally, making them less desired by refiners at a time when global oil demand is in its weakest quarter of the year. The country is reviewing a proposal to reduce crude production, President Mahmoud Ahmadinejad told the state-run Fars news agency yesterday.

“In effect they’re talking up their own book,” said Mike Wittner, head of oil research at Societe Generale SA in London. “I don’t think it signals any change on the part of OPEC.”

Bloomberg