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Iranian oil minister says prices may drop sharply next year

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October 29, 2000 

TEHRAN (AP) - Oil prices will plummet next year if the Organization of Petroleum Exporting Countries continues to produce at its current level, Iran's oil minister said in remarks published Saturday.

"If OPEC carries on with its current production, oil prices will fall sharply," Oil Minister Bijan Namdar Zanganeh told the Iranian newspaper Resalat.

The oil cartel would then have to reduce production to counter the excess supply, the paper quoted Zanganeh as saying.

He said the implementation of OPEC's price band agreement would help.

Under a mechanism adopted earlier this year, the organization said it would withdraw 500,000 barrels a day from the market if oil prices stay below dlrs 22 a barrel for 10 consecutive trading days. The mechanism also calls for boosting daily production by half a million barrels if the cartel's basket of crude remained above dlrs 28 a barrel for 20 consecutive trading days.

OPEC President Ali Rodriguez said Wednesday the oil cartel is likely to increase oil production by 500,000 barrels a day from Monday in a bid to lower prices.

Friday would be the 20th trading day and the mechanism would be triggered Oct. 30, Rodriguez said. The OPEC crude basket was at dlrs 31.14 a barrel on Thursday.

According to analysts, OPEC's plan will not bring extra oil on to the market because the group is already producing above its quotas.

Erik Kreil, international energy analyst at the U.S. Department of Energy's Energy Information Administration, said OPEC is currently producing almost 26.8 million barrels a day - 600,000 barrels above its latest quotas, which took effect Oct. 1.

Iran is the second-largest OPEC exporter after Saudi Arabia.