'Oil market to face supply crisis'

Iran's OPEC Governor Mohammad Ali Khatibi

Source: Press TV

http://www.presstv.ir/detail/154448.html

Iran's OPEC Governor Mohammad Ali Khatibi says the price of crude oil is undervalued, noting that global markets are close to a crisis of uncertain oil supply.

Khatibi told Mehr news agency on Tuesday that he believes the world faces great uncertainties in security of energy supply as the crude prices are set to hit $100 in the near future.

"The world is concerned about the security of energy supply due to the anticipation of a drop in global oil production and a drop in the supply from non-OPEC countries," the official said.

Talking ahead of the 158th meeting of the OPEC oil ministers slated for December 11 in Ecuador, Khatibi said recent studies indicate that in the mid-term perspective the crude oil prices will soar in the global market.

Asked how he saw the oil price fluctuations in 2011, he underlined, "The oil price of $100 price is quite normal and natural in short term."

Khatibi added that the increase in the oil prices still did not reflect the fall in value of the dollar over recent months, saying, "Global oil prices have not increased in a real way compared to previous years."

"In recent years some of non-OPEC countries have continuously oversupplied the market, but this will not be possible in the coming years because of a drop in production," Iran's OPEC governor went on to say.

He further said that it is even possible that the OPEC members decide to decrease their output in the mid-term run which will cause major concerns over the stable supply of the crude oil in the energy market.

Earlier in November, Khatibi said that the world economy is in a position to absorb an oil price of $100, underlining that the oil companies find a price range of $70 to $90 suitable for investments in oil resources

"One of the solutions for securing oil supply to the market is to increase investments in the upstream oil industry and the price hike in oil will lead to more investment in this sector."

In November, OPEC revised upward its world oil demand growth estimates for both 2010 and 2011, saying it was penciling in world oil demand growth of 1.32 million barrels per day (bpd), or 1.6 percent, to 85.78 million bpd for 2010, compared with 1.3 percent previously.

A report by the US Energy Information Administration published in early-November indicated that crude exports by Iran, the world's fourth-largest oil exporter and OPEC's second-largest oil producer, stood at around $59 billion in the first 10 months of 2010.

Iran holds around 10 percent of world oil reserves. In 2009, Iran's revenue from oil exports reached $69.1 billion and it exported approximately 3.8 million barrels per day.

In the 157th meeting of the organization in October, OPEC members elected Iran to hold the organization's presidency as of January 2011, a first for the Islamic Republic.

Freezing temperatures in Europe and the US, along with a weaker dollar, pushed oil prices to a two-year high above $90 a barrel on Monday.