Tehran (Platts)--12May2009

Iran Tuesday called for a new cut in OPEC oil production when the cartel
meets later this month in Vienna, saying rising consumer stockpiles made a new
supply cut necessary despite recent oil price increases. But Algeria said OPEC
should enforce stricter discipline before considering any new cuts.

Tehran's OPEC governor, Mohammad Ali Khatibi, told official news agency
IRNA that consumer inventories had risen to 61 days of forward cover from 52
days just five days ago, a level he described as "very worrying."

"The market situation is not promising," Khatibi said. "Since the crude
oil price has recovered because of the oil products market, some think that
there is no need for an OPEC production cut at the organization's May 28
meeting in Vienna."

But, he said, "with the increase of stockpile levels, cutting oil supply
is necessary."

Khatibi's remarks come a day after Algerian oil minister Chakib Khelil
said OPEC should strictly enforce existing oil output cuts before considering
a new reduction at the upcoming meeting.

Khelil said late Monday that if all OPEC members adhered to their
production targets, a further 600,000-700,000 b/d would be removed from the
market.

"I think OPEC should be very strict on discipline, and I think it would
be very difficult to ask OPEC to reduce production if certain members are not
disciplined [with regard to] the previous cut," he said. "If the members were
disciplined, we would have between 600,000 b/d and 700,000 b/d less on the
market and so prices would be boosted even more than they are at the moment,"
he said.

A Platts survey of OPEC and oil industry officials and analysts estimated
that the 11 members bound by quotas under a 24.845 million b/d target produced
an average 25.74 million b/d in April, 895,000 b/d more than target output.
The April total represents an increase of 130,000 b/d from March levels.

Khelil also said prices were continuing to rise and should climb past
$60/barrel this year.

"If the price continues to rise on its own, then why would we change
anything--it's working with the equities markets at the moment," he said.

"There is too much oil on the market, stocks are high and despite that,
the price is going up," Khelil said.

"We know that demand will increase in the summer and it seems the global
economy will recover in the second half [of 2009]," he said.

US light crude futures earlier Tuesday broke above $60/b for the first
time since November 11, striking an intra-day high of $60.08/b before falling
back to $59.10/b at 1340 GMT.

OPEC's 11 members bound by quotas agreed in December to reduce output by
4.2 million b/d--a combination of two existing reductions with a new cut--from
January. Iraq is not part of this pact.

Although production has dropped significantly since the agreement came
into effect, the group has not managed to reduce output to the level of the
24.845 million b/d target.