OIL MARKETS WELCOME IRAN SAUDI UNDERSTANDING

PARIS 9^th March. (IPS) Oil prices slowed after an agreement was reached between the Iran and Saudi Arabia to keep supplies "adequate and timely".

Iranian Oil Minister Bizhan Namdar-Zangheneh met his Saudi counterpart Mr. Ali al-Nu'aimi Wednesday in the Saudi Capital and agreed in a joint statement on the need for "adequate and timely" supplies.

Tehran and Riyadh "noted that the recent rising oil price levels and their continued volatility is not in the interests of producers or consumers", the official Iranian news agency IRNA reported.

"The ministers reiterated their countries' commitment to oil market stability and the security of supplies," the statement said.

They "agreed that current market conditions and outlook necessitate that oil products from OPEC and non-OPEC provide adequate and timely oil supplies to balance the market in order to reach sustainable price levels conducive to world economic growth and market stability."

The meeting followed a division within OPEC, pitting Saudi Arabia and Iran in opposing camps over whether to raise output.

Tehran had previously opposed any increase, arguing that the mounting US pressure to hike production was unjustified. Other hard liners such as Libya, Iraq and Algeria have backed it.

But Saudi Arabia, the world's leading exporter with three million barrels of spare capacity, and Venezuela have come out in favour of an increase to bring prices down to the 20-25 dollars a barrel range.

The meeting was held to review world oil market conditions and outlook and to sustain the process of co-operation and co-ordination among oil producers for the objective of market stability, said the statement.

Talking to the Iranian State-run television, Mr. Namdar-Zangheneh blamed the soaring oil prices on the speculators and dealers.

"There is no reason for prices soaring as we approach spring. It's purely the result of speculation by dealers," he said.

OPEC ministers are to meet on March 27 in Vienna to decide on whether to roll over year-old production cuts which have sparked a tripling in prices.

Iranian oil experts said the Iran-Saudi understanding would make it much easier to reach an agreement when minister of the Organisation of Petroleum Exporting Countries (OPEC) meet in on March 27."

They noted that a similar meeting between the Saudi and Iranian oil ministers in late 1998 paved the way for a major production cut deal that has more than trebled prices and given OPEC renewed credibility in the highly sensitive world oil market.

On Tuesday, US President Bill Clinton urged producers to aim at "stable prices at a lower level," which he said would be in the best interest of oil-producing countries themselves.

But Iraq's Oil Minister Amer Rashid accused the United States of leading the Organisation of Petroleum Countries into a trap. "We do not want a repeat of the Jakarta disaster," he said.

OPEC decided in Jakarta in 1997 to boost output only to see oil prices plunge beneath 10 dollars a barrel when the Asian financial crisis erupted and caused a dramatic reduction in demand.

On the oil diplomacy front, Namdar-Zangheneh is also to visit Oman and the United Arab Emirates, where is expected on Sunday. Venezuelan Oil Minister Ali Rodriguez, meanwhile, is to travel to Algeria, Libya and Iran as part of OPEC's consultations.

"The oil prices, once in misery, is currently a strong support for the national economies of OPEC members. Iran's concerns are justified. It wants to ensure prices do not back to the dismal levels of a year ago. At that time, consumers had no qualms about loading their reserves. But after prices tripled, thanks to output cuts co-ordinated by the OPEC and non-OPEC producers, the us expressed anxiety and increased pressure to beat the heat", the daily noted.

The price of OPEC's basket of seven crude increased by 98 cents and was 31.26 dollars a barrel Tuesday, up from 29.28 dollars Monday according to OPE calculations.

The organisation's basket comprises Algeria's Sharan blend, Indonesia's

Minas, Nigeria's bonny light, Saudi's Arabian light, Dubai of the UAE, Venezuela's Tia Juana and Mexico's isthmus crude.