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To: yard_man who wrote (24632)	6/24/1998 8:59:00 AM
From: Captain James T. Kirk	Read Replies (1) \| Respond to of 95453

OPEC clears hurdle in oil rescue efforts (Adds Iran ready to cut, Mexico background)) By William Maclean VIENNA, June 24 (Reuters) - OPEC petroleum powers appeared to clear a big stumbling block on Wednesday in efforts to trim output and reverse a disastrous price slump, delegates said. Agreement by cartel number two producer Iran to cut output below 3.6 million barrels per day (bpd) looked like removing an obstacle to bigger OPEC cuts aimed at rallying glutted markets. The Iranian decision followed oil talks in Riyadh on Tuesday between King Fahd of Saudi Arabia and Iranian Foreign Minister Kamal Kharrazi, they noted. The step by the Islamic republic appeared to satisfy cartel kingpin Saudi Arabia, which had signalled doubts about Iran's willingness to sacrifice output for the common good. Iran had been a source of concern to fellow members of the Organisation of the Petroleum Exporting Countries because it recently reported hefty output in a move widely seen as a bid to minimise future supply sacrifices. The success of any output cuts rests largely on the willingness of Saudi Arabia to lower its output towards the prized eight million barrels per day (bpd) level it held for six years after the 1990-91 Gulf crisis. The Iranian decision emerged as ministers met informally in a hotel suite to swap ideas on reductions in their first full gathering of the group's summer conference. Delegates said OPEC was considering cuts extending up to 2.5 million bpd, inclusive of 1.245 million bpd of cuts already pledged in a previous round agreed in March. That would require OPEC to siphon another 1.25 million bpd or so, or more than one percent of global demand, from soggy markets from July 1. A smaller cut of 800,000 bpd or three percent of OPEC output had been floated by delegates in recent weeks. The kingdom's output would be capped at 8.223 million bpd under cuts proposed by Saudi Arabia, Venezuela and Mexico in Amsterdam earlier this month that would result in total OPEC reductions of 800,000 bpd. Prices slumped to their their lowest in 15 years in real terms in March after an OPEC decision last year to hike output limits just as Asian demand began to falter. Any significant extra cuts would take Saudi Arabia, the world's largest producer and exporter, closer to the eight million bpd level. That would send a strong signal of the kingdom's intent to reverse a decline in prices set in motion when it led a 10 percent rise in the group's output limits late last year. One pointer to the urgency of the cuts was the priority given to oil in the Iran-Saudi Arabia talks in Riyadh. ''King Fahd expressed the hope that ... Tehran-Riyadh cooperation within the Organisation of the Petroleum Exporting Countries will help bring oil prices to a desirable level,'' the Iranian News Agency said. Wednesday's meeting was not attended by non-OPEC producers such as Russia, Oman and Mexico, in Vienna as observers. But Russian Fuel and Energy Minister Minister Sergei Generalov said his country would make cuts in exports from July 1 but gave no details of volumes. Mexico has signalled, however, that it is unlikely to cut exports by more than the 100,000 bpd pledged in the Amsterdam agreement. Oil prices rallied around 70 cents on Tuesday on the talk of production cuts. On Wednesday Brent crude rose a further 26 cents to $14.18 a barrel in London. -------------------------------------------------------------------------------- Related News Categories: international