Iran can boost oil production in case of war in Iraq
Iran has the capacity, but not necessarily the intention, to increase oil production by 500,000 bpd in case of a war
in Iraq, Oil Minister Bijan Namdar Zanganeh said.
"I hope a war will not happen, but we have the capacity to increase our production by 500,000 bpd above our current quota, although that does not mean we will do it," he told.
The current OPEC quota for Iran, the cartel's second-largest exporter of crude, is 3.19 mm bpd. Zanganeh was speaking
on the eve of an extraordinary OPEC ministerial meeting in Vienna, where the grouping is expected to lift output
limits at the same time as dropping production levels.
"We will discuss whether we officialise unauthorized over-production or if we maintain the same official production while advising members to pay more attention until the next meeting" in March, Zanganeh said. "There is currently an overproduction by OPEC, and despite that, the price is not falling," he added, citing "the military tension in the Persian Gulf, the American threats against Iraq and the uncertain future of oil".
Meanwhile, Saudi Arabian Oil Minister Ali al-Naimi called on OPEC to cut its oil output by 1.5 to 2 mm bpd as the
powerful cartel prepares to meet to find a way to deal with overproduction on the world market. Al-Naimi was
confirming in Vienna a statement he had made in Britain, ahead of a meeting in Vienna of OPEC.
An OPEC source in Vienna said Saudi Arabia would propose an effective cut in oil production by increasing official quotas but lowering current output levels that now exceed such limits. An oil official said Saudi Arabia was also considering a drop in its production by 300,000-500,000 bpd.
Saudi Arabia is the world's largest oil producer with an output of more than 7 mm bpd. "The oil price will fall under
$ 20 (a barrel), if current production levels are maintained," the official said.
The current OPEC basket price is $ 26.45 for a barrel. In 1998 crude prices dropped below $ 20, and in March 1999 benchmark Brent North Sea crude fell below $ 10.