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To: Douglas V. Fant who wrote (38545)	3/1/1999 8:26:00 AM
From: Platter	Respond to of 95453

LONDON, March 1 (Reuters) - Depressed world oil prices gained little respite on Monday even though key producer Iraq suspended half its crude exports after U.S. jets bombed a crucial pipeline. Benchmark Brent was just four cents up at $10.92 a barrel by 1125 GMT. Prices have averaged below $11 this year -- less even than 1998's lowly $13.34 -- as northern hemisphere winter demand proves too mild to reverse a historic price slump. Even Iraq's closure of a key export artery to Turkey's Mediterranean port of Ceyhan had little impact amid the surfeit of spare oil. Baghdad said U.S. bombs had hit a oil pumping station in one of its near daily aeriel conflict over Iraq since December's bombing campaign. "The attack resulted in the stoppage of crude oil pumping through the Iraqi-Turkish pipeline. The pumping has not been recommenced until this moment," top Iraqi oil official Faleh al-Khayat said on Sunday. Shipping sources said Iraqi shipments of nearly a million bpd into the Mediterranean under Iraq's "oil-for-food" arrangement with the United Nations, continued from oil already in stock. Iraq's Oil Minister Amir Muhammed Rasheed said on Sunday that his country would continue exporting a total 2.1 million bpd under the deal until May. Traders diffidence towards the Iraqi disruption underlined the uphill stuggle facing export cartel OPEC as it approaches a crucial March 23 ministerial meeting. Saudi Arabia's oil minister Ali al-Naimi in an interview on Monday said that OPEC's poor history of supply restraint cast doubt on the wisdom of any fresh output cut pledges to revive low prices. "I believe that OPEC did its best. It took measures to contain the impact of what happened on the demand side. However, in my opinion, this is not a supply problem. It is a demand problem," he told industry newsletter Middle East Economic Survey (MEES) in an interview. "There is also the problem as to whether those concerned will actually implement such a cut. There is a track record here, and it is not a very good one." Naimi said OPEC had shown reasonable compliance with its 2.6 million bpd output cut package. "Compliance has ranged between 70 percent and 95 percent, if you believe these numbers and I do. I think compliance has been reasonable," he said. But he gave no sign of compromise in Saudi Arabia's long dispute over Iran's production quota, saying Tehran had to comply fully with its promised cuts before OPEC could consider taking more action. Venezuela's new Energy Minister Ali Rodriguez admitted on Sunday that Venezuela has still failed to fulfill its pledged cut. "There are just a few barrels left to reach the figure of 525,000 barrels," Rodriguez said. He added that Venezuela planned to be in compliance by the March meeting.

To: Douglas V. Fant who wrote (38545)	3/1/1999 8:29:00 AM
From: Platter	Read Replies (2) \| Respond to of 95453

NICOSIA, March 1 (Reuters) - Saudi Arabian Oil Minister Ali al-Naimi on Monday cast doubt on the wisdom of any fresh output cut pledges to revive low prices in view of OPEC's poor history of supply restraint. Naimi also told the Middle East Economic Survey that Iran had to comply fully with existing promised production cuts before OPEC could consider doing more to boost glutted markets. His remarks indicated that a months-long dispute with Iran over supply cuts had still to be resolved before the producer club can erase a global glut. Naimi said in an interview with the weekly newsletter that he had no doubt a further OPEC production cut of two million barrels per day (bpd) would raise prices for a few months but no-one knew how long its effect would last. "There is also the problem as to whether those concerned will actually implement such a cut. There is a track record here, and it is not a very good one," he said. "One thing we need to accept is the sanctity of agreements," he said. Naimi added that the dispute over the volume of cuts Iran was meant to have made under an OPEC agreement last year concerned all its 10 signatories, not just Saudi Arabia. "The issue is not one of Saudi Arabia versus Iran," he said in an an interview with the weekly. "Nine countries are asking the 10th (Iran) to live up to the June 1998 accord." "It is an issue of compliance with agreements, regardless as to what each one of us thinks or does not think. We worked out an agreement. A reference base has been decided. This is the question," he said. OPEC meets in Vienna on March 23 to decide output policy in an oil market where prices are running at 22-year lows in real terms despite 2.6 million barrels per day (bpd) of cuts agreed by the cartel last year. Iran insists OPEC should recognise its right to cut supply from 3.925 million barrels a day rather than the 3.623 million bpd used as a a baseline last March when OPEC first decided to reduce supply. Iran and Saudi Arabia have held talks aimed at aligning their positions but Iran says any compromise had to come from Saudi Arabia. Naimi said further steps could be considered if OPEC could demonstrate to the market that it had adehered to its promises of supply restraint. But he added: "We cannot do it just by calling for more cuts. Who believes us? Who is going to cut? That is the biggest question: who will cut?" Naimi said that the masterminds of last year's output cuts -- Saudi, Mexico and Venezuela -- were working to align their views ahead of any meeting between the trio before OPEC's March 23 gathering. "Whenever we decide to meet expectations rise. We must therefore have extremely good preparations for meetings. There have to be consultations to ensure that there is sufficient common ground for a meeting. That is what is going on right now," he said. Concerning Venezuela, Saudi Arabia's other traditional OPEC rival, Naimi said he was encouraged. "The new government is saying: 'We will comply... I believe them." Naimi rejected Iraqi calls for a cut in Saudi supply by over one million bpd to make up for the expansion in its supply during Iraq's absence from the market under U.N. sanctions. He said that $18-$20 a barrel for U.S. WTI crude would be a "reasonable price" for oil. Naimi said that the main problem facing oil producers was weak demand rather than excess supply. Naimi was not concerned about supply from non-OPEC producers.