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Market full of oil, price trend "fake": Ahmadinejad

ISFAHAN, Iran (Reuters) - The oil market is plentifully supplied and the rally to record high prices is “fake and imposed”, Iran’s president said on Tuesday, blaming a weak U.S. dollar which he said was being pushed down on purpose.

Iranian President Mahmoud Ahmadinejad attends an official meeting in Tehran June 15, 2008. REUTERS/Raheb Homavandi

“At a time when the growth of consumption is lower than the growth of production and the market is full of oil, prices are rising and this trend is completely fake and imposed,” President Mahmoud Ahmadinejad said in a televised speech.

“It is very clear that visible and invisible hands are controlling prices in a fake way with political and economic aims,” he said when opening a meeting of the OPEC Fund for International Development in the central city of Isfahan.

With high fuel prices sparking protests worldwide, Iran’s anti-U.S. president also took aim at high energy taxes in consumer nations. He said there was an “unfair” difference in income between energy exporting and importing countries.

Iran, the world’s fourth-largest oil exporter, has repeatedly said the market is well-supplied and blames rising prices on speculation, a weak dollar and geopolitical tension.

The Islamic Republic is embroiled in a deepening standoff with Western powers over its nuclear plans, which the United States suspects is aimed at making bombs. Tehran denies this.

Iran has often said it sees no need for the Organization of the Petroleum Exporting Countries (OPEC) to boost output, as the United States and other big oil consumers want.

“As you know the decrease in the dollar’s value and the increase in energy prices are two sides of the same coin which are being introduced as factors behind the recent instability,” said Ahmadinejad.

Saudi Arabia plans to lift output to 9.7 million barrels per day (bpd) in July, United Nations chief Ban Ki-moon said on Sunday after meeting Saudi Oil Minister Ali al-Naimi.

That would be a rise of 550,000 bpd or over 6 percent since May and would take Saudi crude output to its highest monthly rate since August 1981, according to U.S. Energy Information Administration data.


But a senior Iranian oil official, Hojjatollah Ghanimifard, was quoted as saying that increasing production by even 500,000 bpd would “not create a balance in prices.”

Iran’s OPEC governor said any output increase should be ratified by the oil group’s ministers. “If Saudi Arabia acts to increase its output unilaterally it is a wrong thing,” Mohammad Ali Khatibi was quoted as saying by the state broadcaster.

Oil fell $2 on Tuesday after touching a record near $140 the previous day, when prices see-sawed in a $7 range on Monday, supported by the weak U.S. dollar and pressured by Saudi Arabia’s plans to raise output.

Ahmadinejad reiterated his view that oil should be sold in a basket of currencies rather than dollars, an idea which has failed to win over other OPEC members, except Venezuela.

“The ever-increasing decrease in the dollar’s value is one of the world’s major problems,” he said.

He expressed support for a proposal by Venezuela’s President Hugo Chavez to create a bank constituted by OPEC members to act as a counterweight to U.S. influence in the world. He also advocated the establishment of an oil bourse.

Iran has for more than two years been increasing its sales of oil in currencies other than the dollar, saying the weak U.S. unit is eroding its purchasing power.

Ahmadinejad, who has called the dollar a “worthless piece of paper”, suggested a part of its decline was deliberate, without naming any country.

“The planners for some big powers are acting to decrease the dollar’s value,” he said. “For years they imposed inflation and their own economic problems on other nations by injecting the dollar without any support to the global economy.”

Reporting by Zahra Hosseinian in Tehran; Writing by Fredrik Dahl; Editing by James Jukwey