[OPEC] Organization of Petroleum Exporting Countries crude output increase ruled out

Iran's oil minister yesterday rejected any idea of Organization of Petroleum Exporting Countries 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 US President George Walter 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 Organization of Petroleum Exporting Countries would increase production.

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

Organization of Petroleum Exporting Countries'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, Organization of Petroleum Exporting Countries's second-largest producer after Saudi Arabia, says the market is well-supplied with oil and blames the price rise on a weak US 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.

George Walter Bush said yesterday he was pleased with a boost in Saudi oil output but it did not solve problems in the US.

Asked whether he was satisfied with the Saudi oil output boost, Bush said King Abdullah summoned his energy minister. "It's something but it doesn't solve our problem," Bush said. "Our problem in America gets solved if we expand our refining capacity, promote nuclear energy and continue our strategy for the advancement of alternative energies."

Source: Gulf Daily News

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