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Iran fighting U.S. appeal for increased oil production

SPECIAL TO WORLD TRIBUNE.COM
Thursday, February 24, 2000

LONDON5 -- Iran and Saudi Arabia are preparing for a conflict over future oil production by OPEC members.

Saudi Arabia appears ready to respond to U.S. appeals for an increase in production to ensure stabilization of prices. Iran said an increase in production would harm the revised forecasts of increased revenues and damage the market.

The price of the crude basket of OPEC producers has risen from below $10 a barrel in 1998 to around $25 today. The price of North Sea crude oil for April dropped on the Singapore exchange to $25.85, a 50 cent decrease.

The two countries are staking their positions as ministers from the Gulf Cooperation Council meet in Riyad on Wednesday to decide on what to recommend to an OPEC meeting next month. U.S. Energy Secretary Bill Richardson is scheduled to arrive in Riyad over the weekend to discuss the issue.

"My message is going to be that there should be increased production -- that it's important that there be stability in the markets," Richardson said in Cairo on Wednesday. "We're concerned about low inventories. The United States is concerned about the volatility in oil prices, and we think that it's important that the market dictate what the oil prices should be."

"Ten dollars is too low, and 30 is too high," Richardson said. "I'm not going to get into figures, because we think markets should dictate those prices."

Iran, however, is trying to recruit Gulf countries to oppose any hike in oil production. Iran's OPEC governor Hussein Kazempour said any increase would hurt the market. But Kazempour did not rule out the prospect of a supply increase in the fourth quarter of 2000.

"I don't think there is a justification for an increase in output because demand will fall by 2.8 million barrels per day in the second quarter," Kazempour told the English-language Iran Daily on Tuesday. "An increase in output could lead to a very destabilized market."

Sources in OPEC said the cartel might decide on a supply increase starting from April 1.

Thursday, February 24, 2000


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