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Iran Wants Oil Output Cut As OPEC Members Fear Price Crash
TEHRAN, March 11 (News Agencies) - Iranian Oil Minister Bijan Namdar-Zanganeh called Sunday for OPEC to cut production at its March 16th meeting in Vienna as consensus to slash production was gaining support among members of the Organization of the Petroleum Exporting Countries as current stock levels threaten a price crash.
"If OPEC does not cut back its production at Friday's meeting, the excess production on the market will cause prices to plunge," he told state television. He said current output levels were putting some 2.6 million excess barrels on the market daily and also called for "more serious cooperation" between non-OPEC producers and the 11-member cartel.
In Riyadh on Sunday, Saudi Oil Minister Ali al-Nuaimi and Mexican Energy Minister Ernesto Martens held talks aimed at a joint stand with Venezuela ahead of Friday's OPEC meeting, where some cutbacks are widely anticipated.
Mexico is a key producer but does not belong to OPEC.
In London on Friday, oil prices slouched lower as the market waited for indications on the size of a potential cutback from the group.
Nuaimi, in a brief statement to the official SPA news agency, praised "the good relations between the kingdom and Mexico in their coordination on the oil market." The talks, covering "the current situation on the oil market," are to be expanded to include Venezuelan Energy Minister Alvaro Silva Calderon after his arrival on Monday, a Saudi oil ministry official said.
Martens, whose country is a major non-OPEC producer, will travel to Vienna for talks on the sidelines of the cartel's meeting.
Mexico, Saudi Arabia and Venezuela were instrumental in building a consensus on output cuts in 1998 and 1999 that triggered a tripling of oil prices after a collapse to $10 a barrel.
The Vienna meeting is to study forecasts for supply and demand for the rest of 2001 and current stock levels in consumer countries. The gathering should help determine the level of oil production as world demand slows with the end of winter in the Northern Hemisphere.
A Saudi official said last month that a cut would only be decided "after a market study and consultations with OPEC countries and other producers such as Norway and Mexico."
The cartel will also examine "how much of the price level at the time of the meeting in Vienna can be attributed to supply-demand fundamentals and how much to speculation about the meeting's outcome," said the Middle East Economic Survey.
"This last factor is a new consideration for OPEC, which ... has begun taking measures to counter the effects of speculation and manipulation of markets," the industry newsletter said. Most countries in OPEC, which already slashed output by 1.5 million barrels per day (bpd) on February 1st, have set a target of keeping oil prices at around $25 per barrel.
OPEC's president, Algerian Energy Minister Chakib Khelil, on Saturday raised the prospect of another production cut to keep prices around $25, but did not specify the volume.
Qatar's Energy Minister Abdullah bin Hamad al-Attiya, meanwhile, also said he expected OPEC to decide on a cut to make up for oversupply on the world market. In London, oil prices dipped Friday as the market waited for indications on the size of an OPEC cut. A barrel of Brent North Sea crude for April delivery dropped to $26.47 from $26.68 at the previous close.
"There seems to be a growing consensus that OPEC will cut output between 0.5 and one million barrels per day at the meeting, but there does not seem to be a consensus on what will happen to prices after that," said the GNI brokerage house.
In its latest report, the Paris-based International Energy Agency forecast in February that growth in world demand for oil would be sharply undercut by a slowdown in the global economy during 2001.
"World oil demand growth in 2001 has been cut by 140,000 bpd to 1.5 million bpd," it said. "High crude prices and mild weather in Europe and Asia explain only part of the disparity ... The global economy is slowing, curbing demand."
Consumer countries, meanwhile, have urged restraint, fearing that further cutbacks will result in a new price spiral.
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