OPEC to Increase ProductionVIENNA （Reuters) OPEC oil exporters agreed to raise output li
OPEC to Increase Production
VIENNA (Reuters) OPEC oil exporters agreed to raise output limits on Tuesday but second largest producer Iran, fearing a slump in oil prices, opted out of the deal.
The Organization of the Petroleum Exporting Countries said nine members, excluding Iran, would immediately turn up the taps to 1.45 million barrels daily, or seven percent, easing output curbs made a year ago.
The pact came after heavy pressure from OPEC's biggest customer the United States to ease the price of oil and avert a slowdown in economic growth in the West.
Saudi Oil Minister Ali al--Naimi said he hoped to see the price of North Sea Brent in the range of $20-$25 a barrel.
"This decision was made in the interests of producers and consumers in a prudent way. It will have a positive impact and moderate prices," he said.
Iran, outside the pact, said it would raise production in any case, though not by as much as under the quota it was offered.
Iranian Oil Minister Bijan Zanganeh said he saw room for only one million barrels a day of extra oil. He said Tehran saw no shortage in the market.
"Our differences are on principles, and not only a few barrels," Zanganeh told reporters after the meeting had closed.
"OPEC is not a political organization," he added.
He had complained during the two-day OPEC meeting of "political pressure". OPEC delegates said that was an apparent reference to the United States which launched a diplomatic offensive to get OPEC to raise supplies and lower oil prices on the world market.
In Washington, President Clinton said of extra supply: "In the aggregate it could be sufficient to get production and consumption back in alignment," he said.
Analysts said they expected oil prices, already on the slide from recent highs, falling quickly into the $20-$25 range.
"This will mean extra supply and have a negative impact on oil prices," said Gary Rose of Petroleum Industry Research Associates.
"We're going to see a stock build in the second quarter. I would not be surprised to see Brent at $21-$22.”
Rose said: "The United States was pressing hard for a substantial increase and most in OPEC were in favor of a big increase." Iran has expressed its displeasure at this political.
Non-OPEC Mexico and Norway, having cooperated with OPEC in cutting exports when prices crashed, are shortly expected to announce their own increases.
1. () Iran will raise production at all, but less than it was offered under the quota.
2. () Iranian Oil Minister Bijan Zanganeh said the market could absorb 1.45 million barrels of extra oil a day at present.
3. () President Clinton said the new agreement could bring production back to the same level as consumption.
4. () Industry analysts said that the extra oil could have a positive effect on the oil market.
5.() Non-OPEC oil producers such as Mexico and Norway have been competing fiercely with OPEC for world market over the years.
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