Oil prices surge to near nine-year high in Asia

Oil prices surge to near nine-year high in Asia

SINGAPORE (Reuters): Crude oil prices remained near nine-year highs in Asia on Tuesday after breaking through the psychologically important $30 a barrel level in New York.

March New York Mercantile Exchange crude futures were quoted at US$30.25 per barrel at 0700 GMT, unchanged from the New York settlement and just under a post-Gulf War high of $30.30 traded in New York.

Before Monday, U.S. crude prices had not risen above $30 since January 1991 when Iraq invaded Kuwait.

Traders said tight supplies, reflecting producer output cuts, were keeping prices strong.

But key producers are now signaling that they think prices are too high, and are calling for measures to stabilize prices.

"Effectively the markets are squeezed, I think the price is too high, but at the same time, we hope that from March 31 we will take necessary measures in the different countries to give the stability needed by the oil market," Mexican Energy Minister Luis Tellez told Mexico's Televisa network.

Earlier, Tellez said in a radio interview that producers must agree on the means to bring more crude to world markets to ease dwindling supplies.

But he said the effort must be coordinated to prevent a price plunge.

Tellez's remarks were echoed by Iran's Trade Minister, Mohammad Shariat Madari, who said on Tuesday his country was unhappy with the recent sharp increase in oil prices.

The minister said at a news conference in Bangkok that the Organization of Petroleum Exporting Countries (OPEC) should cooperate to ensure a "stable mechanism" for prices.

"I think as an oil producing country Iran is not happy or satisfied with the sudden rise in oil prices," he said.

"Oil producing countries should not allow this strategic commodity which serves as a vital source of revenue to come to the unnatural low level of prices we saw for many years."

U.S. crude prices have now almost tripled from the $10.35 touched in December 1998.

Prices were spurred higher after the International Energy Agency (IEA) reported last week that oil stocks were sharply drawn down late last year.

The IEA said stocks were being depleted even faster now due to producer output cuts.

Trader talk of Saudi Arabia deepening export cuts to Europe and the United States fueled the bullishness and pushed London's March Brent crude futures to a new post-Gulf War high of $28.78 on Monday.

Prices have stayed firm despite Saudi Arabia's denial that it had cut exports to the U.S.

OPEC ministers are due to meet on March 27 to discuss output policy beyond March.

But the three architects of the output cut agreement -- Saudi Arabia, Venezuela and non-OPEC Mexico -- will meet on March 2 to discuss whether production cuts should be extended beyond the end March deadline.