O.P.E.C. limits output to maintain price

Press, 29 June 1987, Page 10

O.P.E.C. limits output to maintain price

NZPA-Reuter Vienna

O.P.E.C. has agreed to limit output to defend its oil price of SUSIB a barrel but Iran, which helped push the agreement through, made clear that it wanted the world to pay more.

“We are aiming at higher prices,” said the Iranian oil Minister, Gholamreza Aqazadeh, after Organisation of Petroleum Exporting Countries set an output ceiling of 16.6 million barrels a day until the end of the year. This ceiling was much lower than O.P.E.C. originally agreed in a December pricing and production agreement under review at the O.P.E.C. conference, which ended in Vienna on Saturday. Delegates said the agreed figure was a vic-

tory for Iran; which persuaded fellow O.P.E.C. states to abandon a proposal to increase output to 16.2 million barrels a day in the third quarter of this year and 18.6 million in the fourth.

Iran argued, against opposition from key Gulf states, that the proposed fourth quarter figure was too high and risked flooding the market and undermining the price O.P.E.C. has set since its December pact came into effect “I was fully successful,” Mr Aqazadeh told reporters. He said Teheran, which wants a return to O.P.E.C.’s defunct 1985 oil price of $2B a barrel, saw $lB as “a floor, not a ceiling”. But he did not say how high he wanted prices to go. /T Gulf states, led by Saudi Arabia, wanted to in-

crease their share of world oil markets gradually and maintain the $lB price to avoid frightening off clients or pushing the world into economic recession. Reflecting the fears of price moderates, the meeting set up a committee to monitor prices on the free spot market, where oil is sold to the highest bidder, in contrast to the take-it-or-leave-it charge O.P.E.C. reinstated for oil companies last December. The committee is empowered to call an extraordinary meeting if free prices deviate sharply from O.P.E.C.’s fixed prices, but no specific figure for the difference was given. O.P.E.C.’s next scheduled meeting is on December 9 in Vienna.

It also set up a threestate committee to try to

persuade Iraq to join the agreement. Iraq rejected the quota given to it in the original December pact because it wanted an output quota equal to the higher level given to its Gulf war adversary, Iran. The O.P.E.C. conference president, Rilwanu Lukman, of Nigeria, told a news conference that free-market prices should become firmer following the pact but oil analysts said it was unlikely that this would mean higher fuel bills for consumers for the time being. They said overproduction by Iraq, which is pumping about 500,000 barrels a day above its 1.466 million quota, with • excess output ,by some other O.P.E.C. states in defiance of limits, meant the oil market was well supplied.