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Iran blasts reserve move ahead of EU talks

June 27, 2011 at 8:08 AM   |   Comments

VIENNA, June 27 (UPI) -- Iran, preparing to preside over a Vienna meeting focusing on OPEC-EU energy policies over the weekend slammed a move by the West to release oil reserves.

Tehran's OPEC governor, Mohammad Ali Khatibi, Saturday blasted a decision by the United States and the International Energy Agency to release the strategic reserves as a politically motivated "intervention in the ordinary function of the oil market."

The United States last week announced a decision to release 30 million barrels of oil from its strategic reserves in coordination with the IEA in a bid to stabilize energy prices.

In all, 60 million barrels of oil were to be released -- a move that came after OPEC this month failed to reach an agreement to increase oil output to compensate for continuing supply disruptions and price spikes caused by the Libyan uprising and turmoil in the Arab world.

News of the reserve release and the European debt crisis sent oil prices falling to four-month lows Friday.

U.S. futures for July closed $1.94 lower, settling at $93.01 per barrel on the New York Mercantile Exchange -- down 2 percent for its lowest mark since February 18.

But Khatibi warned Saturday those lows won't be sustainable.

"Following the failure to bring down the prices at 159th ministerial meeting of OPEC in June 8, the United States of America and Europe are using all the means to push oil prices lower," he said in a statement to the official Web site Iran's oil ministry, SHANA.

He asserted the falling oil prices were "artificial" and the result not of "supply and demand or market needs but political pressures by the United States."

The strategic reserves, Khatibi said, are for emergencies and so drawing them down is "risky" and are "a kind of political maneuver."

The oil market faces no shortages while supply and demand are well balanced, he told the Web site.

Iran, which holds the rotating OPEC presidency, deadlocked with Saudi Arabia at the cartel's June 8 meeting on whether to answer global demands to raise production, raising doubts about Riyadh's traditional dominance of the 11-member group.

Iran was able to rally five OPEC members to block a bid by Saudi Arabia to increase production quotas.

"The reasons presented by those countries willing to increase OPEC production were not strong enough to be accepted and that is why the meeting decided to maintain the former agreed level of production," Khatibi said then.

The disagreements over the strategic reserve release came as interim Iranian Oil Ministry Mohammad Aliabadi was set to chair the Eighth Ministerial Meeting on Energy Dialogue between EU and OPEC starting Monday in Vienna.

The semiofficial Iranian Fars News Agency said he, Khatibi and other OPEC governors would meet with EU officials to talk about long-term energy policies.

The event was to be attended by a number of OPEC oil ministers, EU Energy Commissioner Gunther Oettinger and OPEC Secretary General Abdullah Al-Badri, KUNA, the Kuwait News Agency, reported.

The EU-OPEC dialogues began in 2004 and are meant to bolster ties between oil producers and consumers and to smooth out price volatility – a big challenge given that oil prices have risen $20 per barrel since the Arab world upheavals.

"We want to speak (with OPEC) about security of supply for 2011 and 2012 and to speak about what is a feasible price," Oettinger told Iran's Press TV, adding that he wasn't worried about high oil prices.

The EU imports around 40 percent of its oil from OPEC countries. It says the purpose of the dialogue is to "create more stable international oil markets and prices, an attractive investment climate, a more transparent market, a better market analysis and forecasts as well as, technological and international cooperation."

© 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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