Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Think4Yourself who wrote (39207)	3/8/1999 8:20:00 AM
From: Platter	of 95453

LONDON, March 8 (Reuters) - Oil prices were spurred to an eight-week high on Monday as OPEC heavyweights Saudi Arabia and Iran intensified talks aimed at reviving ailing world markets. Bellwether Brent blend crude stood 34 cents higher at $11.90 a barrel as dealers hedged against the possibility that an OPEC meeting later in March would agree new curbs on supply. Monday's price rise came in the wake of a meeting on Sunday in Riyadh between Saudi Arabian oil minister Ali al-Naimi and his Iranian counterpart Bijan Zanganeh. The discussions were the latest in a series of contacts between Organisation of the Petroleum Exporting Countries producers and came just two weeks before the group meets in Vienna to decide output policy. Iran and Saudi Arabia have been trying to resolve a dispute over the issue of how to measure the baseline for Iranian output cuts, agreed last year under a 2.6 million barrel a day OPEC supply reduction. The issue has blocked progress toward the further cuts OPEC members already agree are necessary to lift oil prices from last year's 22-year lows. Naimi and Zanganeh met hot on the heels of talks in Riyadh last week between Iran's foreign minister Kamal Kharrazi and Saudi leaders. Iranian President Mohammad Khatami described the negotiations as "positive" and Saudi Crown Prince Abdullah pointed to unspecified "agreements" between the two sides. "I think from an historic point of view a fair amount of diplomatic prepositioning involving heads of state before an OPEC meeting is meaningful," said Peter Gignoux of Salomon Smith Barney. "It's another OPEC cliffhanger." However, it remained unclear whether the troublesome Iranian baseline dispute had finally been put to bed at Sunday's meeting. "We made progress on a number of issues," was all a Gulf source familiar with Saudi policy would say. Traders will now be watching the visit of Iranian Foreign Minister Kamal Kharazzi to fellow OPEC producer Venezuela in a week's time. Gulf Arab oil ministers may also meet later this week to prepare for the March 23 OPEC gathering. Analysts have said that the oil group needs to slice at least another million barrels per day (bpd) on top of existing cuts. Non-OPEC producers like Mexico and Norway are likely to be asked to chip in again. Oil prices at about $11 a barrel on average so far this year are running even lower than last year's $13.30, itself a six dollar decline from prices in 1997.

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