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Sun 14 Dec 2008 05:01 PM

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Iran calls for minimum 1.5mn bpd oil output cut

Oil minister says reduction of 1.5mn to 2mn will be proposed at Dec. 17 talks.

Iran will propose that OPEC cuts oil output by between 1.5 million and 2 million barrels per day (bpd) when the group meets in Algeria on Dec. 17, Iran's oil minister was quoted as saying on Sunday.

Ministers of the Organisation of the Petroleum Exporting Countries are expected to announce an output cut at the Algeria talks to shore up prices that have plunged about $100 a barrel since a July peak. On Friday oil was trading around $46 a barrel.

"Iran's proposal for this week's OPEC meeting in Algeria will be a reduction of between 1.5 million and 2 million bpd," IRNA reported its oil minister, Gholamhossein Nozari, as saying.

OPEC deferred an output cut decision at a meeting in Cairo last month. OPEC delegates said Saudi Arabia and its Gulf allies demanded tighter adherence to existing curbs, with some pointing at Iran. Tehran says it is sticking to its commitments.

"The ground for a serious reduction existed in the Cairo meeting," the Iranian minister said.

OPEC's recent output curbs amount to about 2 million bpd, including a cut agreed in October and effective Nov. 1 of 1.5 million bpd. Iran, which is the OPEC's second biggest producer, was to reduce its output by 199,000 bpd under the November move.

Nozari said OPEC needed to cut production by 1.5 million to 2 million bpd to prevent a drop in prices next year.

"The proposal for this level of output cut is in order to establish a balance in the market for oil supply and demand," he was quoted as saying.

"Otherwise we will have oversupply in the first and second quarter of the coming year, which will go into stocks and will mean we are confronted with an additional oil price drop in the market next summer," he added. (Reuters)

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