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Mar 28 06:16 PM GMT Home: Business:OPEC Summit Venezuela: OPEC has new oil output agreement
Rodriguez of Venezuela declined to elaborate on the details of the pact as ministers gathered at OPEC headquarters.
By Karen Matusic, March 28, 2000, 03:53 PM
VIENNA (Reuters) - OPEC oil producers were set to approve a deal on Tuesday to raise output limits and satisfy the demands of the United States for lower prices.
Iran and Saudi trying to work it out Venezuelan Oil Minister Ali Rodriguez said the Organisation of the Petroleum Exporting Countries had a reached an agreement on how far to turn up the taps to replenish inventories depleted by a year of strict supply curbs. "I believe we have an agreement, yes," he said.
Rodriguez declined to elaborate on the details of the pact as ministers gathered at OPEC headquarters. They were expected formally to approve the pact.
Cartel kingpin Saudi Arabia has pressed for two days for an extra 1.7 million barrels a day, enough to raise OPEC limits by just over seven percent.
Saudi Oil Minister Ali Al-Naimi told reporters he was not prepared to change his position to meet the preference of Middle East rival Iran for a smaller increase. "No," he said.
Entering Tuesday's formal meeting, Naimi declined comment on the agreement but smiled broadly and raised both thumbs.
OPEC's incremental oil will come on top of official limits for 10 OPEC nations of 22.976 million bpd agreed last March.
Iran, angry at what it sees as interference from Washington had wanted to limit extra OPEC oil to 1.2 million bpd, or only five percent. But Iranian Oil Minister Bijan Zanganeh said as he departed for a 1500 GMT session of all ministers that the group "would make an agreement." Saudi is eager to secure a deal big enough to ease crude prices into the $25-$27 a barrel range that satisfies its ally in the West, the United States. Oil on US markets was priced at $27.80 on Tuesday.
Federal Reserve Chairman Alan Greenspan said on Monday that the US economy was safe from inflation at those price levels.
He warned OPEC that higher prices could backfire by stemming demand for oil.
Iran's Zanganeh, in a sideswipe at Washington, had said OPEC should be left to make decisions free of outside interference.
"We do not want to create a shortage in the market (but) it is a bad signal for us and other producers to decide under political pressure," he said. Unilateral US sanctions have banned Iranian oil since 1995. Saudi Arabia during tough negotiations has won key support from Algeria, previously in the Iranian camp and opposed to a large increase.
"I'd like to see 1.7 million barrels per day in the sense that it won't have a big impact on prices, will help the Asian economic recovery and rebuild stocks," said Algerian Oil Minister Chakib Khelil.
Iran worried about extra Iraqi supply
OPEC delegates said Iran was worried about the consequences of Iraq's announcement on Saturday that it will lift oil sales under the United Nations oil-for-food exchange.
Iraqi Oil Minister Amir Rasheed said Baghdad would take advantage of the UN's approval of spare parts for its oil sector and lift exports by 700,000 bpd. Under UN sanctions since its invasion of Kuwait in 1990, Iraq is not party to OPEC output limits.
The cartel a year ago took drastic action to lift prices from only $10 by cutting 4.32 million barrels daily.
Leakage above those official limits means producers already are pumping about 1.2 million of their projected new quotas. Analysts say that means net extra supply, including extra leakage, is likely to be less than a million barrels daily.
Worried about high gasoline prices and inflationary pressures, the United States sees room for OPEC eventually to open up the taps by three million barrels daily.
OPEC seems likely to agree to meet again in June to see whether additional volumes are needed.
Mexico, OPEC's main non-OPEC ally in limiting oil sales is also expected shortly to announce extra supplies that could add about another 200,000 bpd into the US market.
-- Martin Thompson (email@example.com), March 28, 2000