The organization of Petroleum exporting Countries must reduce its output by up to two million barrels a day during its Oran meeting this week in order to prevent a further buildup in stockpiles, Iran's Hamshahri newspaper reports Monday, quoting the country's Opec governor.
"The amount of (oil) supply in the market is high," Mohammad Ali Khatibi said, adding that the fact that oil consuming countries are increasing crude stockpiles from 52 to 56 days of forward cover demonstrates that supply is high, the newspaper reports.
"The amount of the reduction must be between 1.8 million and 2 million barrels. Of course, a 2 million barrel reduction is one that will have a stronger impact" so that stockpiling does not rise further, Khatibi said, reports Hamshahri.
The number of days of forward coverage indicates how much the Organization for Economic Cooperation and Development countries hold in their reserves during days of average consumption.
OPEC is scheduled to meet Wednesday in Algeria to decide on whether to cut oil output as a result to the continuous slump in prices, with OPEC president Chakib Khelil recently saying a decision for a "severe" production cut is expected at the meeting.
Asked if OPEC will definitely cut output, Khatibi said that "we cannot yet make a formal declaration," Hamshahri reports.
"Many of the members are in agreement (over the need for a) production cut, but OPEC's decision will be made with the consensus of all members," he said, according to Hamshahri.
The newspaper also reports Khatibi as agreeing with the country's oil minister over the fare price of oil.
"He had the right opinion about the price and stated the true price and value of oil as a commodity," Khatibi was quotes as saying.
Iran's Oil Minister Gholam Hossein Nozari said Saturday the "true" price for a barrel of crude oil should be more than $100.
On Monday, January sweet light crude trades up $1.13 on Globex at $47.41 per barrel, almost $100 less that its all-time-high price seen earlier this year.