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Thu 4 Dec 2008 12:06 AM

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Iran's state oil firm says $75 oil is 'fair'

As markets price the commodity below $50, Iran moves into line with Saudi target figure. 

The head of state-owned National Iranian Oil Company (NIOC) said on Wednesday that $75 a barrel was a "fair price" for oil, echoing comments by OPEC's biggest producer, Saudi Arabia and Qatar.The figure is a significant reduction from Iran's 'demand' in October, when the country's oil minister, Gholamhossein Nozari, said a price below $100 was "too low".

World oil prices have tumbled to below $50 after peaking at $147 in July, with expectations rising that the Organisation of the Petroleum Exporting Countries will add to recent output curbs with a new cut when ministers meet in Algeria this month.

"We believe that the price of $75 per barrel is a fair price," Seifollah Jashnsaz, NIOC managing director, said in comments carried by the official news agency IRNA.

Economists say Iran, OPEC's second biggest producer, needs oil prices to bounce back to around $80 a barrel if it is to avoid a spending squeeze in the budget to run from March.

OPEC's secretary-general, Abdullah Al-Badri, said in remarks published on Wednesday that oil producers needed at least $70 to $80 a barrel or more for crude to meet their development needs. He has also said OPEC would cut a significant amount in Algeria.

"We don't want to impose a particular price on the market but it must be at least $75, $80 or more so producing countries have enough income to meet the needs of their citizens, investments to expand, and to carry out oil projects," Al-Badri said. He was speaking to Iran's Hamshahri newspaper.

"It is still not clear what level of production OPEC will reduce but OPEC must act in this regard," he said.

OPEC ministers met in Cairo at the end of November but did not take action there. Saudi Arabia and Gulf allies have been pushing for OPEC states to adhere to earlier cuts first.

Recent output curbs were aimed to reduce 2 million barrels per day from supply. Delegates in Cairo said OPEC states saw the need to slice another 1 to 1.5 million bpd. (Reuters)

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