Iran’s Minister Says $28 Oil Price ‘Suitable’

TEHRAN, 2 May 2004 — Iranian Oil Minister Bijan Namdar Zanganeh said yesterday his country fears global overproduction of oil in the months to come, and that a price of $28 per barrel is “suitable”.

“I am anxious because the current prices are such that production will not go down. We are seeing an increase in reserves and that could cause a drop in prices all of a sudden,” the minister said on the sideline of the Sixth Iranian Petrochemical Conference in Tehran.

“I fear a dive in prices,” he said. “It is possible that all our earnings will suddenly plummet because of a significant fall in oil prices.” “Currently, the upper part of the $22-to-$28 range is a good price for OPEC,” he declared.

“As long as we have not decided jointly on any changes in prices, it is a good figure, since the economic growth in the world is approaching four percent and this figure is appropriate to us currently,” Zanganeh said. He said: “The price of the barrel does not depend much on the producing countries” but on the political situation of the Middle East, as well as “difficulties of refining in the United States.” The price per barrel has exceeded $30 for several months, with Brent crude reaching $35 on Friday for the first time since October 2000.

In addition to that, OPEC members are more and more openly talking of raising the four-year-old $22-$28 price range. The matter could be studied during a meeting on May 21.

Zanganeh also said Iran had suffered from Washington’s sanctions on the country, which forbid American companies from investing in Iranian oil and gas. “In the absence of the American companies, we had to choose our partners in a less competitive market. If the large American oil companies and the American subcontractors could have participated, without a doubt, we would have been able to obtain better prices for our contracts” in the field of gas, he added.

Meanwhile, Iran has inked a deal to supply the United Arab Emirates with 15 million cubic meters (525 million feet) of gas a day. Zanganeh confirmed that a contract had been signed but he provided no further details. National Iranian Gas Export Company chief Rokneddin Javadi said last week that Iran expected to sign the contract imminently. No information about the deal has been released to the public.