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Iran urges caution over an OPEC output increase

TEHRAN: Iranian Oil Minister Bijan Namdar Zanganeh urged OPEC on Friday to exercise "strong caution" in deciding to raise crude oil production to stabilise prices.

Zanganeh and other oil ministers of the Organisation of Petroleum Exporting Countries (OPEC) are to meet in Vienna on Monday to decide how much crude they can afford to release to the market after the expiry this month of a year-long agreement on export limits.

"We believe that we must be very cautious in changing the output level. There is a risk of a collapse in prices if we speak of a big rise in production," he said on state television.

"We should not take any decision on raising production without first testing the market and releasing it (extra oil) in small doses. There is a possibility that we may bring a shock to the market," Zanganeh said.

He said anticipation of a hefty production hike had already contributed to a fall in prices ahead of the meeting. "Our suggestion is to take a very cautious approach to the market," the minister said.

The oil producers group has been under pressure from the West, mainly the United States, to agree on a substantial increase in output to alleviate concerns over the impact of high prices on inflation and economic growth.

But a 20 percent price slide on the international oil market in the past two weeks has made it more difficult for OPEC to reach a consensus on a production increase, despite a flurry of contacts among its members.

Iran, in desperate need of hard cash to invigorate its stagnant economy, is among the more strident opponents of a sharp production rise within OPEC. The Iranian economy, mainly fuelled by oil exports, is just beginning to recover from a nine-year low in prices just a year ago.

"If necessary, OPEC should arrange more meetings on an emergency basis...so that the current price stability does not go to waste," Zanganeh said. "Stable prices are more important to us than high prices."

He urged OPEC not to bow to pressure from the United States.

"We hope that OPEC, like before, will keep its independence in this meeting and not be influenced by such pressures," the minister said.

"We should think about both the interests of producers and consumers. The consumers' economic growth is important too. A world economic slump reduces demand for energy.

"In total, we want a decision to be made through a natural dialogue and away from unnatural political pressures," he said. -Reuters