Speaking to Shana on the verge of the 149th OPEC meeting which is slated for Sept. 9 in Vienna, Gholam-Hossein Nozari said that “Oil prices have dropped by some 36 dollars. This is while the oil exporting countries have undergone a 25-30 percent rise in production costs.”
OPEC should discuss the ways to curb oversupply in the upcoming meeting, the minister said.
Crude has tumbled from a record high of $147 in July and was trading on Friday at below $107
Oil prices have dipped below $105 as traders predicted that rising US unemployment would lead to consumers cutting back on petrol use.
US light, sweet crude fell as low as $105.16 a barrel before recovering to settle down $1.66 at $105.23. Brent crude dropped $2.21 to $104.09.
Prices have fallen from their record of more than $147 a barrel amid evidence of a looming recession in the US.
At the same time, a number of political and currency risks have also subsided.
And the failure of Hurricane Gustav to cause any major production disruption in the Gulf of Mexico also ensured the price stayed well below recent highs.
'Growing concern'
With economic growth slowing, and many people worried about their job prospects, observers say there is a good chance that consumer spending will slow, limiting demand for crude oil.
The outlook for the US economy became more grim as Labor department figures showed the unemployment rate in the US was at its highest level in nearly five years.
It also revised upwards job loss figures for each of the past two months.
"There's been a terrific amount of growing concern about the outlook for demand globally," said John Kilduff, senior vice president of risk management at MF Global LLC.
"Today's employment report emboldened that concern."
Markets still volatile
Next week the oil producer cartel Opec meets in Vienna with investors waiting to see whether it will indicate plans to cut production - something which would be likely to stem the price drop. The organisation has said it may act to defend the $100-a-barrel level for crude.
The dollar's recent resurgence has also helped speed up the decline in the price of oil.
Many investors bought commodities to hedge against inflation and weakness greenback.
But the dollar rebounded, investment funds rid themselves of the hedges, pushing commodities prices lower.
However, while the price of oil may be falling, analysts are keen to point out that markets remain volatile.
Earlier this year a number of well respected Wall Street firms and analysts predicted that oil could climb as high as $250 a barrel.
In the meantime, however, the drop in oil prices will bring some relief to consumers and governments who have been faced with accelerating price growth and more expensive fuel.
Grains and soya: Grains and soya prices dropped as rain fell in the United States, boosting crop growth, dealers said.
By Friday on the Chicago Board of Trade, maize for December delivery was down to $5.49 per bushel from $5.85 the previous week. November-dated soyabean meal — used in animal feed — dropped to $11.90 from $13.24.
LONDON: Crude oil prices plunged this week as Hurricane Gustav spared US energy facilities in the Gulf of Mexico, traders said. Commodities futures, notably oil and metals, were also pushed lower by a strong dollar and concerns about falling demand for raw materials amid a global economic slowdown, they added.
Oil: Oil prices tumbled by about 10 percent in value to five-month lows close to $104 early in the week as it appeared that Gustav had spared damage to US refineries and platforms.
They soon recovered to just under $110 but resumed their fall as the US government decided to release crude stocks from its strategic reserve after Gustav had nevertheless halted energy production in the Gulf of Mexico.
Oil prices again fell below $105 Friday on concerns over slowing energy demand and a strong US currency, while the market awaited next week’s OPEC meeting on crude output levels.
The dollar struck a near 11-month high versus the euro Friday on news of slumping industrial output in Germany, Europe’s biggest economy, and as the market awaited key US jobs data, traders said.
Precious metals: Gold slid below $800 an ounce before rebounding back above the psychological level as the dollar took a knock from weak US jobs figures on Friday. Silver, platinum and palladium futures all fell in gold’s wake.
On the London Bullion Market, gold dropped to $808.50 per ounce at Friday’s late fixing from $833 a week earlier. Silver decreased to $12.72 per ounce from $13.78.
On the London Platinum and Palladium Market, platinum retreated to $1,387 per ounce at the late fixing on Friday from $1,479. Palladium slipped to $277 per ounce from $302.
Base metals: Base metals prices dropped on concerns over weakening demand amid a slowdown to the global economy. They also fell because of strong supplies and as investors prepared to invest in a resurgent dollar.
Copper futures tumbled below $7,000 a tonne on Friday for the first time since February.
By Friday, copper for delivery in three months slumped to $6,889 per tonne on the London Metal Exchange from $7,509 a week earlier. Three-month aluminium slid to $2,595 per tonne from $2,714. Three-month lead dropped to $1,936 per tonne from $1,975. Three-month zinc fell to $1,780 per tonne from $1,812. Three-month tin slipped to $19,425 per tonne from $20,000. Three-month nickel declined to $18,600 per tonne from $20,226.
Sugar: Sugar prices headed south as oil prices slid. Sugar is used in the production of ethanol, a cheaper alternative to motor fuel which is refined from crude oil.
By Friday on LIFFE, the price per tonne of white sugar for October delivery retreated to 388.60 pounds from 408 pounds the previous week. On NYBOT, the price of unrefined sugar for October delivery slipped to 12.77 US cents per pound from 13.23 cents.
The euro fell to $1.4196 in midday London trade — the lowest level since October 24, 2007. It later recovered to above $1.42 after poorly-received US jobs figures.
A strong US currency makes dollar-priced commodities more expensive for buyers holding weaker currencies, dampening demand for the raw materials, which is already falling because of a global economic slowdown.
As well as pushing the euro lower, the dollar also struck 2.5-year highs versus sterling this week as the market anticipated recession in Britain as well as across the eurozone.
The Organization of the Petroleum Exporting Countries (OPEC) meets next week in Vienna, home to the cartel’s headquarters, amid speculation that the group which produces 40 percent of the world’s oil may decide to cut output as prices slide toward $100.
Crude oil, which hit a record high $147.27 on July 11 in New York, has lost nearly $40 in less than two months.
Oil prices had broken through $100 a barrel for the first time at the start of January on geo-political concerns, notably surrounding the ongoing nuclear dispute between the West and Iran, which is a major producer and exporter of crude oil.
By Friday, New York’s main oil futures contract, light sweet crude for delivery in October, was trading at $106.93 a barrel, down from $117.41 a week earlier. Brent North Sea crude for October slumped to $105.33 a barrel from $115.65.