Iran says OPEC will not boost output

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Saturday , May 17, 2008 at 1454 hrs Iran's oil minister rejected on Saturday any idea of OPEC raising production, saying it would fail to ease record prices as the market was already ‘saturated’ with oil.

Gholamhossein Nozari also dismissed as a ‘political move’ Saudi Arabia's announcement on Friday of a modest hike in output after an appeal from visiting U.S. President George W. Bush.

"No, the market is saturated with oil and a hike in production does not have an impact on the price," Nozari told reporters when asked whether the Organisation of Petroleum Exporting Countries (OPEC) would increase production.

Oil prices have risen six-fold since 2002 and doubled since 2007 as rising demand from China and other developing nations cinched spare production capacity, adding pressure on the U.S. economy already hard hit by a housing slump.

OPEC's smallest producer, Ecuador, said on Friday that members should consider raising output to stem the oil rally because high prices are hurting the poor.

But Iran, OPEC's second-largest producer after Saudi Arabia and a price hawk, says the market is well-supplied with oil and blames the price rise on a weak U.S. dollar, speculation and other factors outside the control of the 13-member cartel.

Oil shot to a record high near $128 a barrel on Friday as a bullish price forecast from investment bank Goldman Sachs drowned out the offer of more supply from Saudi Arabia.

Political move

Bush, who has come under increasing domestic pressure to act as the price of oil weighs on the economy, met Saudi King Abdullah in Riyadh on Friday to ask for more oil from OPEC to tame record oil prices.

Apart from a modest output hike, the world's top oil exporter also said it was ready to pump more if needed.

Asked about Saudi Arabia's announcement that Riyadh had agreed to boost output by 3.3 per cent, or 300,000 barrels per day, to loosen up the market and make up for declines in other OPEC nations, Nozari was quoted by Fars News Agency as saying: "This action is more of a political move ... this action will only help to increase reserves."

Unlike Saudi Arabia, a key U.S. ally in the Middle East, Tehran and Washington are bitter foes and sharply at odds over Tehran's disputed nuclear plans and also over who is to blame for violence in Iraq.