Conflict over Iran's oil minister could result in no-show at OPEC meeting

Forbes:

Iran's parliament has rejected the new conservative president Mahmood Ahmandinejad's candidate for oil minister, raising the possibility that Iran will have no minister at the Sept 19 OPEC meeting, analysts said.

Ahmandinejad had put forward hardliner Ali Saidloo, to replace the current serving minister Bijan Zangenh, but this has been met with resistance from his cabinet.

'The dynamic of the next meeting could be very different if Iran were not represented. It could result in the meeting ending up with a very liberal twist,' a market source said. READ MORE

Although what OPEC can do at this present time is limited, the source added.

OPEC producers are currently pumping oil with a limited spare capacity ahead of what is expected to be even higher demand in winter. Therefore, should there be any shortage in global oil production, OPEC would would not be in a position to stem the shortfall.

The International Energy Agency in its latest August monthly report predicts that global oil demand will rise from 83.33 mln bpd to 85.90 mln bpd in the fourth quarter.

After heavyweight producer Saudi Arabia who has the biggest voice, Iran follows closely behind, producing 4 mln barrels per day, and is has been dubbed the group's most conservative member.

Earlier in the week the OPEC secretary general, Sheikh Ahmad al-Fahd al-Sabah of Kuwait, said he does not expect oil prices to fall sharply but does see a chance that OPEC oil will be 7 usd cheaper this winter, according to Man Financial analysts.

The source said, there are a whole host of reasons which could see oil prices either higher or lower by 7 usd come winter.

Reasons for prices trending higher could be rising geopolitical tensions, particularly over Iran's nuclear programme.

In addition, the current problems passing Iraq's constitution could also mount up should the country's oil exports see a sharp drop.

In the US, if the hurricane season causes problems in production and refining, and indeed, if refineries continue to be plagued with ongoing production problems, then oil prices could be sent even higher, the source said.

On the other hand, as oil prices are still high, there is the possibility of a 7 usd a barrel correction, the source added.