Iran Wants Quota Row End Before Any Oil Cuts

December 16, 1998 - 0:0
DUBAI Iran wants the troubled OPEC cartel to resolve the heated issue of oil output quotas assigned after the 1990-1991 the Persian Gulf crisis before it considers joining any new production cut moves, an Iranian oil source said Tuesday. "The issue of Iraqi supplies and the quotas should be on the table before any new output cut decisions are taken. Iran wants this on the table," the source, who requested anonymity, told Reuters by telephone from Tehran. "This has to be on the agenda of any meetings to consider new output cuts," he added.

The remarks on Iran's stand come at a critical time for the Organization of the Petroleum Exporting Countries, a once powerful cartel now under siege from an oil price crash and squabbling by members over compliance with production cut pledges. Ministers from Saudi Arabia, Venezuela and non-OPEC Mexico -- architects of global production cuts this year -- will meet in Madrid on Thursday hoping to shape a strategy to shore up prices.

But the key to any new moves inside OPEC depends on harmony between three key players with differeing agendas -- Saudi Arabia, Venezuela and Iran. Iran wants OPEC kingpin Saudi Arabia to reverse some of the production gains it made in the wake of the 1990-1991 the Persian Gulf War, a sticking point in negotiations. OPEC producers boosted production during the Persian Gulf War to make up for lost production from Iraq, which was hit with a United Nations embargo when it invaded Kuwait. However, Saudi Arabia, which had the greatest surplus capacity, made up most of the supply gap.

"The countries that gained the most from Iraq's absence after the Persian Gulf War should cut more than the others," said the Iranian oil source. Tehran has said it was ready to take any new action to help the world oil market. Saudi Arabia and Iran, traditional the Persian Gulf rivals who have improved ties, recently stepped up contacts to align their views on ways of improving oil prices.

Two rounds of OPEC and non-OPEC production cuts have failed to rescue prices, which are at their lowest level since 1976 on an annual average basis. The Iranian oil source said the Islamic Republic would stick to its own baseline production quota and would hold its position firmly even if oil producers agreed to a new round of output cuts. "Iran will maintain its position, which is clear," the source added.

"this will not change." Iran wants OPEC to use 3.942 million barrels per day (bpd) as the basis for its own 305,000 bpd reduction and not the 3.623 million bpd judged by secondary media sources. Asked if Iran would back holding an emergency OPEC meeting before the cartel's next scheduled session in March, the Iranian oil source said: "Before any meetings are held, issues have to be resolved.

Battered oil markets gained ground on Monday after Venezuela said it was considering fresh supply cuts and Saudi Arabia called again for action to support prices. Benchmark Brent tip-toed into double figures to end 34 cents firmer at $10.16 a barrel, half a dollar above a fresh 12-year low struck on Thursday. (Reuter)