Money motivates Iran to consider oil output cut

DUBAI (Reuters) – Money, not politics, is behind Iran’s review of oil output levels, say refiners that buy crude from OPEC’s second biggest producer.

U.S. crude jumped to a record near $127 a barrel on Tuesday after Iran’s President Ahmadinejad was quoted as saying Tehran was studying a plan to cut output.

Some traders leapt to the conclusion Ahmadinejad was pursuing his dispute with the United States, which has taken issue with the country’s nuclear programme.

But Iranian oil ministry officials and customers said Iran is only reviewing its output because stocks have swollen.

Refiners are refusing to pay up for heavy Iranian crude that is difficult to convert into transport fuels and Iran is refusing to cut prices further.

“This is about the price and quality of the oil,” said one buyer of Iranian crude. “This crude is a nightmare for refiners. There is a price for everything and if they want to get rid of the stuff they will have to stomach selling at a lower price.”

Reuters