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Suitable oil price level unclear

Suitable oil price level unclear
OPEC members have different views about the suitable oil price level, Iran's representative in the producer organisation told on Sunday.

OPEC members have different views about the suitable oil price level, Iran's representative in the producer organisation told on Sunday.

"There are different opinions by different (OPEC) members about the oil prices... Some believe the price of $70-80 (per barrel) is high and some believe it is low," Mohammad Ali Khatibi said in a telephone interview, without naming countries.

He also said a weak U.S. dollar had "caused everyone to think more about trying to find a solution for that", without elaborating on what the Organization of the Petroleum Exporting Countries could do to address the situation.

Regarding future demand, he said there was speculation in the market of an increase of between 0.7 million to 1.4 million barrels per day (bpd) in 2010.

If that demand increase were to materialise, "this would create a positive environment", Khatibi said.

Oil prices rose to a one-year high of $82 last week, after rallying 17 percent since Oct. 10. That rise coincided with a rise in global stock indices and a weaker dollar, which plunged to a 14-month low above $1.50 per euro.

OPEC's Secretary-General Abdullah al-Badri said on Thursday the 12-member group was comfortable with oil prices at current levels, particularly compared to the price drop to near $30 late last year.

Khatibi said: "Each country expresses its own viewpoint in this regard. But as far as I know there were no agreements between OPEC's member countries over the oil prices."

He added: "We have to define what is the high dollar value and what is the low value. Everybody has its own definition."


Oil, priced in dollars, has been moving in an inverse price relation against the U.S. unit. Iran a few years ago began increasing its sales of oil for currencies other than the dollar, saying a week U.S. currency eroded its purchasing power.

The Islamic Republic, the world's fifth-largest oil exporter, is under U.S. and U.N. sanctions over its disputed nuclear programme.

Khatibi said a weak dollar could have a positive impact on the U.S. economy, for example by encouraging its exports.

"But definitely it is not (positive) for those who are selling their products in dollars," he said.

OPEC agreed to curb its output by 4.2 million barrels per day (bpd) late last year. It has kept official policy unchanged at meetings this year, but industry estimates show actual OPEC production is gradually rising.

While OPEC expects a stronger economy next year, oil inventories are high. In addition, there are millions of barrels being stored at sea on tankers.

Khatibi played down any hopes of a swift economic recovery in the world, predicting "ups and downs".

"The speed of such a recovery is not high and therefore we should not have high expectations that we would quit the current economic recession (soon)," he said.

Global oil demand plunged last year amid a financial crisis and after oil prices spiked to a record above $147 in July, before falling to nearly a five-year low near $32 in December.

OPEC's members pump more than a third of the world's oil. All members, except Iraq, agree to limit output.


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