Iran/OPEC: Prices Depend On Duration Of Any War,Damage

sg.biz.yahoo.com Monday February 24, 3:38 PM

TEHRAN (Dow Jones)--The Organization of Petroleum Exporting Countries won't reduce its output ceiling at its March meeting given the fact that the oil market is being driven by military and political tensions in the region, Iran's Oil Minister Bijan Zanganeh said Monday.

"We won't reduce production given the existing situation which is unusual because of the military and political situation in the region. The pressure on the oil market has nothing to do with fundamentals," he told reporters on the sidelines of an industry conference in Iran's capital.

Zanganeh said Iran hadn't received a proposal for OPEC to suspend quotas if the U.S. leads a strike on Iraq. "We will consider any proposals when (OPEC) gets together (in Vienna on Mar. 11)," he said.

Fellow OPEC members Saudi Arabia and Kuwait floated the proposal to mitigate the possibility of oil prices spiking in the event of a war on Iraq.

Iran/OPEC -3: Prices Depend On Duration Of Any War,Damage

Zanganeh said the direction of global oil prices would depend on the duration of any war on Iraq, the extent of any damage inflicted on Iraqi oil facilities, and the possible spillover of any military action and tensions into neighboring countries.

Asked whether he still thinks a potential supply glut of 3 million - 4 million barrels a day could be triggered by the traditional drop in demand in the second quarter, Zanganeh said: "If we are to talk about the second quarter, with the arrival of Venezuela, we'll have the market excess I mentioned before."

Oil production in Venezuela, once the fifth largest exporter in the world, has been crippled by two months of industrial action.

OPEC will review its oil output ceiling of 24.5 million b/d at its Mar. 11 meeting in Vienna.

• By Hashem Kalantari, Dow Jones Newswires, 0098218966230 -Edited by Hilary Mc Cully