OPEC ministers differ on pumping increase

Iran resists Saudi-backed plan, seeks lesser amount



VIENNA, Austria -- Ministers of the Organization of the Petroleum Exporting Countries meeting here to discuss raising oil production by as much as 1.7 million barrels a day adjourned last night after squabbling over the size of the increase.

But the difference in respective positions was about 200,000 barrels daily, and all sides publicly predicted some rise in production. Iran was said to be resisting a Saudi-backed plan for pumping 1.7 million more barrels a day, arguing that the amount should be smaller.

The oil ministers, who resume their discussions today, consulted informally for a few hours yesterday before their formal session. The countries represented have talked for weeks about expanding production and have held intensive meetings in the past few days.

Such an increase would be larger than many analysts had expected, although it would be less than the 2.5 million barrels sought by a Clinton administration worried about the ramifications of high gasoline prices.

The rise, once approved, could make oil cheaper by several dollars a barrel, but when that price reduction would kick in and whether it would be passed on to consumers remained unclear.

A senior OPEC official said the proposed increase would just about reverse the production cuts the cartel agreed upon a year ago, which sent oil prices soaring and ignited a political uproar in the United States as gasoline prices have surged to more than $1.60 a gallon in many cities.

"We believe this number will result in bringing back market stability," the official said, speaking on condition of anonymity before yesterday's meeting. "It is a reasonable increase, a very reasonable increase to make sure there are reasonable stocks in the second quarter."

Asked if there was much uncertainty about the outcome, he firmly shook his head.

The oil ministers are also expected to announce plans for a follow-up meeting in June at which they could choose to again raise production levels if the price stays near $30 a barrel. Saudi officials want to get the price down to about $25 a barrel.

Iran, OPEC's second-largest producer after Saudi Arabia, is among several countries still opposed to such a big boost in production. But other OPEC officials predicted that they would agree on an increase of at least 1.5 million barrels a day -- but more likely 1.7 million -- levels that have been urged by the Saudis.

"What is being discussed is a return of the 1.7 million barrels that were removed from production last year," Kuwait's oil minister, Sheik Saud Nasser al-Sabah, said in an interview. Although he described an increase in production as a move driven by politics rather than economics, he predicted that the agreement would be close to the levels sought by Saudi Arabia.

He said oil prices were likely to fall: "The market will look at this as an increase, and will react by reducing prices."

The surge in gasoline prices has become a major election-year topic in the United States. Lawmakers in Congress have lambasted OPEC countries in recent weeks and accused Saudi Arabia and Kuwait of paying no heed to the role the United States played in rescuing Kuwait from Iraq during the Persian Gulf war in 1991.

George W. Bush, the likely Republican presidential nominee, has called for a big reduction in gasoline taxes. Vice President Al Gore, the expected Democratic nominee, has been peppered with complaints, and the Clinton administration has waged an intense lobbying campaign to persuade OPEC countries to agree to a large increase.

Analysts cautioned that the expected increase would probably have only a modest impact on gasoline prices, probably no more than 10 cents a gallon.

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