RAISE CRUDE OIL PRICE ANNUALLY, IRAN SUGGESTS PLAN WOULD AVERT SHOCK

RAISE CRUDE OIL PRICE ANNUALLY, IRAN SUGGESTS PLAN WOULD AVERT SHOCK

A real annual increase in oil prices should be established to ward off any price shocks, Iran's minister of petroleum suggested Monday.

Gholamreza Aghazadeh said the increase should be linked to growth in the economies of the most developed nations, who are members of the Organization for Economic Cooperation and Development."A rational and gradual increase in the price of oil would not only block an accelerated increase in demand, but would also enable producer nations to obtain the necessary investments through which they can improve . . . production capacity," he said.

Speaking to the opening session of a two-day Oil and Money conference sponsored by the International Herald Tribune and Oil Daily newspapers, Mr. Aghazadeh said the program would benefit members of the Organization of Petroleum Exporting Countries.

He said the lowest level of demand for OPEC oil will be between 26 million and 27 million barrels a day in 1995, rising to 30 million b/d by 2000. No increase in production capacity can be expected before 1995, he said.

"With OPEC's maximum production capacity now standing at 27 million barrels a day, the desirable balancing point could materialize in 1994," he said. He defined that point as a capacity utilization rate of 90 percent to 95 percent.

Reaching that operating rate would eliminate the glut and force the market toward a shortage, which could cause a price shock, he warned. "The answer lies in the gradual and constant increase of the price."

Present prices have caused an increase in demand without growth in capacity, Mr. Gholamreza said, and will lead to sharp price fluctuations in the future.

The minister also forecast that Iran will become one of the world's top exporters of natural gas, given its large reserves and small consumption.

Studies will determine the feasibility of transferring Iranian gas to other Middle and Far Eastern countries by pipeline.

"We are also fully prepared to consider proposals that would make the transfer of Iranian gas to Europe possible," he said. Transport could include pipelines through the Soviet Union or Turkey, or through liquefication, he suggested.