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Iran favors $30-35 price range for OPEC oil

Tehran, July 24, IRNA -- Iran's envoy to OPEC managerial board Hossein Kazempour Ardebili said in Tehran on Saturday that the range of prices Iran favors for OPEC basket of crude oil is 30 to 35 dollars per barrel.

Ardebili told IRNA that the OPEC members are in negotiations to reach consensus on changing price range of the cartel's crude oil.

He said that with restoration of political calm to the Persian Gulf, the change in prices ranges of 30 to 35 dollars a barrel by EC would not be far from expectation.

Asked why OPEC declines to announce the range of its favorite prices, Ardebili said that if OPEC members refuse to announce the change in price range or do not decide on it, that's because they do not know how long the range would last.

The Iranian envoy said OPEC should defend any price range it proposes and subsequently curtail the output.

Hence, he said, OPEC should change the price range whenever the region is free from any political tension and calm is back there.

The Iranian expert said that under such conditions, OPEC can set its target price range with respect to such factors as crude basket price, inflation and fluctuations in dollar's parity rate against other hard currencies.

He said any change in range of OPEC prices would not be logical under present circumstances.

He added that the subject should be raised in OPEC ministerial meeting and due decisions should be made only when the members can defend it.

The higher the OPEC price range, the graver the risk of failure to defend it, said Ardebili, adding that raising the issue under present conditions is likely to damage the unity among the OPEC members.

He said any increase in range of prices should depend on amount of decrease in the output.

He went on to say that any fall in production of OPEC crude would be tantamount to raising a number of other issues, including quotas -- something that would not be rational to speak about.

The OPEC members had better make maximum benefit from ongoing opportunities and earn more income and postpone dealing with a string of minor divisive issues, said Iran's OPEC envoy.

As for oil market conditions and the OPEC production ceiling, Ardebili said OPEC has done its best and currently supply continues to exceed the demand.

He said the supply-demand condition on the market show crude oil reserves are on the rise. OPEC would not hence be able to add to the reserves which would build up pressure on oil prices in the coming months, he added.

He commented that a two-phased increase in the output to the tune of 2,500,000 barrels by OPEC is far from expectation of the major oil consumers worldwide.

He said refining problem on different oil markets, especially in the US, is the most important reason for hike in prices of crude.

He added that demand for various kinds of high-density crude has increased on the US markets due to difference in prices of gas and oil and partial shift in fuel consumption of gas powered plants in favor of kiln oil.

Ardebili said OPEC should not be blamed for mismanagement of different sources of energy on major consumer markets, for which certain profiteering refining and distribution companies should be partially blamed.

He added that OPEC members have shown their goodwill by boosting the output.

The Islamic Republic of Iran has been sticking to the OPEC decisions in that concern.

Elsewhere in the interview, Ardebili said while OPEC was not able to raise its output not more than 500,000 barrels in its daily production from August 1, Iran managed to consult with other members, including Saudi Arabia and Kuwait as well as the Cartel's secretariat to postpone the timing of the Organization's extraordinary meeting, slated for July 15.

He said the extraordinary meeting, if held, would have raised the expectations for OPEC oversupply, while it neither wanted nor was able to present more crude to the market.

He added that hence, the logical option was not to hold the extraordinary meeting and waiting to see consequences of a second phase of boosting the production.

Ardebili predicted that crude oil prices will continue falling and there will be lesser demands on the eve of autumn season.

The events taking place in different regions relay a shock to the oil market, provoking upward prices, he commented.

He foresaw a daily increase of 1.6 to 1.8 million barrels in crude demand on global markets in 2005 due to continued rise in economic growth.

As for the agenda of OPEC's September meeting, Ardebili said whatever decision the OPEC members would adopt in their September meeting depends on future conditions and political status of the Persian Gulf region.

Asked when Iraq would join OPEC quota system, Ardebili said that if he were Iraqi officials, he would have tried to join the quota system later but would continue to take part in the Organization's meetings.

OPEC members can not force Iraq to join the quota system, said Ardebili, adding that when Iraq is out of the quota system and continues to have higher production, why it should sign up to the scheme and produce less.

In Iran's point of view, Iraq should join the system when it is has a one-million-barrel output deficit, he said.

He hoped for speedy restoration of stability and calm to Iraq, an OPEC founding member whose long-term interests are intertwined with collaboration with other members, so that it would showcase its crude production programs.

Being fully aware of Iraq's future production plans, OPEC would be able to predict when the country can join the quota system, concluded Ardebili.

... Payvand News - 7/25/04 ... --

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