An Iranian official in the Organization of Petroleum Exporting Countries said Saturday that the producers group is considering leaving oil production levels unchanged or perhaps even trimming them to shore up flagging prices and defend market share.
"The market is oversupplied by at least 1 million barrels a day. If OPEC would like to remove this additional oil out of the market, then OPEC has to cut some production," OPEC governor Mohammad Ali Khatibi told Dow Jones in a telephone interview.
"There will be maybe two options. One option is maintaining the level of production. It means OPEC will roll over the production. The other option will be some decrease in production," he added.
The topic will lead OPEC's agenda when representatives of the group's 13 member nations gather Sept. 9 in Vienna to discuss production policy.
Oil prices peaked in early July at over $145 a barrel. They have since fallen 22% as the high prices carved deeply into demand, especially in the transport sector. The September crude oil futures contract closed Friday at $113.77 a barrel on the New York Mercantile Exchange, a fresh three-month low. See Futures Movers.
Khatibi's comments come just a day after OPEC said higher prices and weak economic conditions in most industrialized nations are slowing global oil demand.
"Summer strong oil demand growth in China, Middle East and Asia has not been enough to offset the huge decline in OECD oil demand in the second quarter," the producers group said Friday in its monthly oil report.
The group's latest estimate trims 2008 demand growth by 30,000 barrels per day -- its fifth consecutive month of downward revisions. The group now estimates global oil demand this year will average 86.9 million bpd. It sees demand inching up to 87.8 million bpd next year.
At the same time, the revised forecast sees oil demand from OPEC's members slipping to 32.1 million bpd, or 100,000 bpd less than in 2007. The 2009 forecast extends the trend, with demand for OPEC oil easing to an average of 31.3 million bpd. The drop is the result of slowing demand growth and oil coming into the market from newly developed fields in non-OPEC nations.
OPEC claims it has bumped up output to help calm the volatile oil market, pumping 32.64 million bpd in July, or 780,000 bpd more than in April. The group's monthly report also said OPEC is now producing "well above the demand for its crude."