Iran's former envoy to the OPEC Mohammad-Ali Khatibi on Saturday emphasized management of the market by the OPEC and non-OPEC producers.
Speaking to IRNA, Khatibi warned, 'The failureof OPEC emergency session to make appropriate and new decision will adversely affect the market, even leading to drastic fall in the prices.'
He said, 'Among main reasons for fall in the oil prices is jitters in Chinese economy and staggering low global demand.'
Noting that China's economy has over recent years been the driving force for growth in the demand, he said that presently, growth in the demand on part of China is not as before, rather it has decreased and consequently prices are on the decline.
Khatibi commented that another reason for falling oil prices is upward growth in the supplies of OPEC and non-OPEC producers to an extent that two million barrels of oil are daily marketed by the OPEC members.
He said the OPEC session pegged members' daily production ceiling at 30 million barrels but OPEC's daily output level now stands at 32 million barrels.
He opined that psychological factors have been influential in decline of the prices. Analysts predict that lifting of sanctions and 500,000 to 600,000 barrels increase in the Iran's oil supply to the market have provoked psychological atmosphere for further price decline.
He said if producers do not take any concrete measures, prices will continue to decrease to reach a new equilibrium point.
He noted that however, certain other analyses reveal that increase in the oil supply will lead to a surplus and in that case, the surplus by the OPEC members will reach as high as two to three million barrels.
Khatibi said that usually, demand for oil goes high in the fall and winter seasons and subsequently, prices are adjusted to some extent. However, now the output surplus is at a level that the market cannot absorb all the extra oil of the market.
Commenting on the OPEC emergency meeting, he said OPEC emergency meeting and its failure to make a suitable decision will leave negative impact on the market, even encourage further decline in the prices.
He complained that former OPEC session did not make any new decision for market management and it is not clear the new session will be helpful.
On the joint meeting of the OPEC and non-OPEC producers, Khatibi said the OPEC and other producers held sessions formerly when prices started falling and now holding such sessions is necessary to draw up mechanisms for management of the market.
Oil started falling from last summer, reaching about 40 dollars in December from 100 dollars a barrel.
With start of the new year, market conditions have improved and prices are in the range of 60 dollars a barrel. Over recent weeks, a new wave of price decline has started and prices are now at about 40 dollars.