- The Washington Times - Thursday, March 9, 2000

Iran appeared to soften its stand against an increase in OPEC oil production after a meeting yesterday of Iranian and Saudi Arabian oil ministers.
A joint statement issued after a meeting between Iran's Bijan Namdar Zanganeh and Saudi Arabia's Ali Naimi said the ministers agreed that market volatility was not in the long-term interests of producers or consumers, Iran's official Islamic Republic News Agency reported.
"The ministers agreed that current market conditions and outlook necessitate that oil producers from OPEC and non-OPEC provide adequate and timely oil supplies to balance the market in order to reach sustainable price levels conducive to world economic growth and market stability," IRNA quoted the statement as saying. The ministers met in the Saudi capital Riyadh.
The joint statement along with later remarks by Mr. Zanganeh suggested Iran was moving toward supporting an increase in oil production by the Organization of Petroleum Exporting Countries.
"It's the beginning of the end" for the group's production limits, said Michael Fitzpatrick, a trader at Fimat USA Inc. in New York.
OPEC ministers are scheduled to gather in Vienna, Austria, on March 27 to consider raising production quotas to increase the world's supply of oil and help bring down spiraling prices.
"It doesn't explicitly say that they will hike output in the second quarter, but the fact that they talked about the recent price rise is a good sign for the market," said oil analyst Lawrence Eagles at GNI brokerage, "The market is selling on the Saudi-Iran agreement today."
In New York, the price of benchmark light, sweet crude for April delivery fell by 79 cents to 33.34 dollars per barrel.
As recently as Tuesday, Mr. Zanganeh said the latest increase in prices was only "transitory" and that no hasty decision should be made on production levels by the 11-nation OPEC cartel.
Oil prices have been rising since OPEC and non-OPEC producers began cutting production in the spring of 1998 to counter a drop in prices to 12-year lows. Total cutbacks amount to some 5 million barrels a day.
The U.S. Energy Department said earlier this week that even if OPEC agrees to raise production, gasoline prices still could hit $1.80 or more a gallon in the United States before they ease.
On Monday, oil producers Libya, Iran and Algeria said OPEC should extend its production cuts when they expire at the end of the month.
They said there is no need to pump more oil now because the world will be entering a traditionally low-demand period in the second quarter.
With retail gasoline prices in the United States already at record levels above $1.50 a gallon, months before peak summer driving season, the United States has put considerable political pressure on OPEC producers for increased supplies.
A key Senate panel seemed set yesterday to approve a non-binding measure urging President Clinton to press OPEC for an "immediate increase" in crude oil production.
Mr. Clinton should tell OPEC that "the United States seeks an immediate increase in the OPEC crude oil production quotas," according to the bill before the Senate Foreign Relations Committee.
The measure specifically noted that Washington should not be satisfied with "simply an agreement at the March 27, 2000, meeting to lift production quotas at a later date."
And not everyone was convinced that the meeting in Tehran would lead to increased production.
"This statement may represent some softening, but it may just represent diplomatic language," said Tim Evans, senior energy analyst at Pegasus Econometric Group in New York. "We won't really know until they tell us something more."

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