The price of bench­mark US oil rose ahead of a key OPEC meet­ing that could be­come a show­down be­tween Sau­di Ara­bia and Iran over how much oil the or­gan­i­sa­tion is pro­duc­ing. US crude oil rose 62 cents to fin­ish at US$83.32 per bar­rel yes­ter­day in New York. Brent crude, which is used to price in­ter­na­tion­al va­ri­eties of oil, fell 86 cents to US$97.14 per bar­rel. Brent's price has fall­en about 23 per cent since reach­ing a high of US$126.22 for the year in March.

Sau­di Ara­bia, OPEC's biggest pro­duc­er, has raised out­put to al­most 10 mil­lion bar­rels a day in an ef­fort to push Brent down to­ward US$100 per bar­rel, a lev­el the Saud­is be­lieve the glob­al econ­o­my can tol­er­ate. Iran wants a high­er price be­cause its oil ex­ports have been cur­tailed by West­ern sanc­tions im­posed be­cause of a dis­pute over its nu­clear pro­gramme.

An Opec re­port pub­lished yes­ter­day showed that its pro­duc­tion was just short of 33 mil­lion bar­rels a day in April. That's al­most three mil­lion bar­rels more than the or­gan­i­sa­tion's over­all quo­ta and the high­est in four years. Iran will like­ly ar­gue that pro­duc­tion needs to be cut when the Or­gan­i­sa­tion of Pe­tro­le­um Ex­port­ing Coun­tries meets to­mor­row in Vi­en­na.

What­ev­er the out­come, an­a­lysts ex­pect to see a great deal of games­man­ship at the meet­ing. Oth­er OPEC mem­bers could sup­port Iran's call for low­er pro­duc­tion. Venezue­lan Pres­i­dent Hugo Chavez said last week that Opec mem­bers should main­tain what he called a "fair lev­el" of oil prices, which he said was around US$100 per bar­rel.

Tra­di­tion En­er­gy an­a­lyst Ad­di­son Arm­strong said that Iran's econ­o­my al­ready is reel­ing from the sanc­tions and that the Saud­is "can use the falling oil prices as a way to keep Iran in check, which is one of their over­rid­ing po­lit­i­cal goals." The US and oth­er world lead­ers be­lieve Iran may be work­ing on a nu­clear bomb, a charge that Iran de­nies.

The eco­nom­ic sanc­tions in place make it tougher for Iran to sell its oil by block­ing fi­nan­cial trans­ac­tions with ma­jor Iran­ian banks. At least 18 coun­tries have cut back on Iran­ian oil im­ports in wake of the sanc­tions. And Iran is al­so fac­ing a Eu­ro­pean Union oil em­bar­go start­ing Ju­ly 1.

US of­fi­cials said Iran's oil ex­ports have de­clined from about 2.5 mil­lion bar­rels a day last year to be­tween 1.2 and 1.8 mil­lion bar­rels a day, chok­ing a key source of rev­enue for the regime. Iran is par­tic­i­pat­ing in talks about its nu­clear pro­gramme but so far hasn't made any con­ces­sions.

Oil trad­er Stephen Schork said the Ira­ni­ans "re­al­ly are in a pre­car­i­ous state." "They've over­played their oil card and not re­al­is­ing, or not think­ing, the West would call their bluff and the West has called their bluff. Now, they're just try­ing to save face," he said.

Platts, the en­er­gy in­for­ma­tion arm of Mc­Graw-Hill, said that Iraq has moved ahead of Iraq to be­come Opec's No 2 ex­porter. The Opec meet­ing comes against the back­drop of weak­er eco­nom­ic growth in the US and Chi­na, the world's biggest con­sumers of oil, and a debt cri­sis in Eu­rope. This week­end's elec­tion in Greece could de­ter­mine if that fi­nan­cial­ly trou­bled coun­try will leave the eu­ro cur­ren­cy union.