By William Kay 06 January 2003 20:44

After a meeting in Riyadh yesterday, Saudi Arabia and Russia promised to keep their oil supplies running at a high enough level to prevent a potentially damaging jump in oil prices. This followed a pledge by Opec to increase production by up to a million barrels a day until the price has fallen from its present $30 (£18.75) a barrel to less than $28.

The oil price has risen strongly in recent weeks amid fears that a war in Iraq could disrupt exports throughout the Gulf, compounded by an industrial strike in Venezuela threatening supplies to the US.

"Both [Saudi Arabia and Russia] discussed the importance of stabilising oil prices and the necessity that they don't rise [to such an extent] that they affect global economic growth," said the Saudi oil minister Ali al-Naimi after meeting Igor Yusufov, the Russian energy minister. "The kingdom and Russia agree that co-operation is necessary to ensure that there is no lack of oil supplies." He added that oil markets were in bad shape and all producers had to co-operate to ensure a stable market.

Earlier, the United Arab Emirates oil minister, Obaid bin Saif al-Nasseri, said Opec would raise output if the price of its basket of crude oils remained above $28 until 14 January.

"Opec will increase its oil supply if prices remain above the higher level of the $22 to $28 price mechanism until 14 January. The hike will occur after consultation between members, who will determine the volume," he said, adding that Opec was not bound to increase supply by the 500,000 barrels per day level stipulated in the price band mechanism.

Opec has vowed repeatedly to fill any supply gap created by a possible US attack on Iraq.

Russian oil output is set to rise to an average 8.4 million barrels per day (bpd) this year, 800,000 bpd higher than the average last year. Russia does not belong to Opec.

Analysts say Moscow could easily move to 10.4 million bpd over the next few years and overtake Saudi Arabia, which pumped slightly more than eight million bpd towards the end of 2002.

Opec members are keen not to let Russia increase its market share at their expense.

By William Kay 06 January 2003 20:44

After a meeting in Riyadh yesterday, Saudi Arabia and Russia promised to keep their oil supplies running at a high enough level to prevent a potentially damaging jump in oil prices. This followed a pledge by Opec to increase production by up to a million barrels a day until the price has fallen from its present $30 (£18.75) a barrel to less than $28.

The oil price has risen strongly in recent weeks amid fears that a war in Iraq could disrupt exports throughout the Gulf, compounded by an industrial strike in Venezuela threatening supplies to the US.

"Both [Saudi Arabia and Russia] discussed the importance of stabilising oil prices and the necessity that they don't rise [to such an extent] that they affect global economic growth," said the Saudi oil minister Ali al-Naimi after meeting Igor Yusufov, the Russian energy minister. "The kingdom and Russia agree that co-operation is necessary to ensure that there is no lack of oil supplies." He added that oil markets were in bad shape and all producers had to co-operate to ensure a stable market.

Earlier, the United Arab Emirates oil minister, Obaid bin Saif al-Nasseri, said Opec would raise output if the price of its basket of crude oils remained above $28 until 14 January.

"Opec will increase its oil supply if prices remain above the higher level of the $22 to $28 price mechanism until 14 January. The hike will occur after consultation between members, who will determine the volume," he said, adding that Opec was not bound to increase supply by the 500,000 barrels per day level stipulated in the price band mechanism.

Opec has vowed repeatedly to fill any supply gap created by a possible US attack on Iraq.

Russian oil output is set to rise to an average 8.4 million barrels per day (bpd) this year, 800,000 bpd higher than the average last year. Russia does not belong to Opec.

Analysts say Moscow could easily move to 10.4 million bpd over the next few years and overtake Saudi Arabia, which pumped slightly more than eight million bpd towards the end of 2002.

Opec members are keen not to let Russia increase its market share at their expense.

His handling of the immediate threats could have a decisive impact on his presidency and the 2004 poll campaign

WASHINGTON - President George W. Bush faces an array of policy challenges in the coming weeks that could prove pivotal for his presidency as well as the 2004 election campaign.

Returning to the White House yesterday after a 10-day winter break of long walks and brush-clearing in Texas, he has to confront immediately the triple threats of a defiant Iraq, a nuclear-ambitious North Korea and a US economy that refuses to spark.

ARTWORK BY LUDWIG ILIO

The month culminates with a United Nations assessment of Iraq's weapons programmes and the President's keynote State of the Union address.

But Mr Bush aims first to tackle the economy with stimulus initiatives worth up to US$600 billion (S$1 trillion).

Today, he is scheduled to meet his Cabinet as he hammers out the details of a plan he will unveil tomorrow that is centred on tax cuts beyond those enacted in 2001.

Political analysts say Mr Bush's re-election ambitions could hinge on his economic performance and Democrats are ratcheting up criticism of rising unemployment and falling stock values.

His father, former president George Bush, failed to win a second term mainly because of a sagging economy, despite prosecuting the 1991 Gulf War that was heralded as a success.

Mr Bush is also on the offensive on the military front, overseeing an intensifying troop buildup around Iraq.

'This war, like other wars, will not be won on the defensive,' he told soldiers at the Fort Hood Army base on Friday. He was referring to the war on terrorism he has linked to destroying President Saddam Hussein's alleged nuclear, chemical and biological weapons programmes.

The clock is running down for Mr Bush to decide whether to attack Iraq. By Jan 27, arms inspectors must submit a report on Iraq's compliance with UN disarmament demands.

Meanwhile, Afghanistan is mired in an unresolved conflict. In a symptom of Latin America's woes, Venezuela's President is threatening martial law to end deadly protests.

Arab-Israeli hostilities are greater than at any time since the 1993 peace process was launched. And Japan's economy is adrift, with ramifications for others in Asia.

Ever lurking in the background is the dangerous mix of Islamic extremism and terrorism, both of which are likely to be deeply affected by the administration's course in 2003. And Osama bin Laden is still on the loose.

'These are issues that were developing in the late 1990s, but what's new is the risk of all these quite different problems becoming acute crises simultaneously,' said Mr James Steinberg, director of foreign policy studies at the Brookings Institution.

The current and probable crises of 2003 come in the critical third year of Mr Bush's presidency, which will shape the legacy of his term as well as the issues of elections next year, analysts predict.

Iraq is at the top of the list. What happens in the confrontation between Mr Bush and Mr Saddam is likely to have the biggest impact on America's international stature, as well as Mr Bush's standing at home, by year's end. --Los Angeles Times, Reuters

www.arabnews.com By a Staff Writer

RIYADH, 6 January 2003 — The world’s top two oil exporters, Saudi Arabia and Russia, agreed yesterday that action was needed to bring down prices after benchmark Brent crude topped $30 a barrel in London.

Minister of Petroleum and Mineral Resources Ali Al-Naimi and Russian Energy Minister Igor Iusufov stressed the “need to restore stability to the markets and make sure they do not rise to a level which could have a negative impact on world economic growth,” the Saudi Press Agency said.

A member of the Russian delegation said the talks were part of Riyadh’s efforts to “bring prices back below $28 a barrel.”

Both sides agreed that new steps would have to be taken to bring prices back within the target range, he said.

The two ministers agreed the situation on world oil markets was “difficult” and required “concerted action by exporters to avoid any supply shortfall,” SPA said.

Iraq war jitters, a long-running strike in Venezuela and a particularly cold winter in the United States have all helped to push world prices higher in recent weeks.

In New York, the price of reference light sweet crude for February delivery rose $1.23 to $33.08 in late deals Friday.

Earlier in London, the price of benchmark Brent North Sea crude oil for February delivery rose to $30.16 a barrel from $29.49 Thursday.

In Abu Dhabi, UAE’s Oil Minister Obeid ibn Seif Al-Nasseri said the OPEC stood ready to increase production if oil prices remained above $28 a barrel in the middle of January.

“If prices stay above $28 a barrel until Jan. 14, OPEC will have to intervene and take the appropriate steps to adjust output,” Nasseri told the official WAM news agency.

The oil production quotas set by OPEC include a provision for a 500,000 barrel per day increase if prices remain above the group’s $25 to $28 target range for 20 straight days.

The mechanism has only been used once before, in October 2000. But the Emirate’s oil minister hinted that this time OPEC ministers might agree to a bigger production increase. It was down to the group’s members to “hold consultations to determine the volume of additional production,” he said.

In Doha, OPEC President Abdullah Al-Attiyah said yesterday that the group was poised to boost crude supplies by up to one million barrels per day (bpd) in a bid to tame oil prices which have rocketed to two-year highs. “An increase could be anywhere between 500,000 bpd to one million bpd...It will depend on consultations,” Attiyah, the oil minister of Qatar, said.

The world's two top oil exporters, Saudi Arabia and Russia, have agreed on the need to bring down prices after benchmark Brent crude topped US$30 a barrel in London.

After a meeting in Riyadh, Saudi Oil Minister Ali al-Nuaimi and Russian Energy Minister Igor Iusufov stressed the "need to restore stability to the markets and make sure they do not rise to a level which could have a negative impact on world economic growth," the official Saudi Press Agency said.Advertisement A member of the Russian delegation also told reporters the talks were part of Riyadh's efforts to "bring prices back below 28 dollars a barrel".

Both sides were agreed that new steps would have to be taken to bring prices back within the target range, he said.

In a separate development, the President of OPEC has said that the oil cartel is ready to increase production by up to one million barrels a day if prices remain above US$28 a barrel by the middle of this month.

Oil prices have rallied sharply on fears that political turmoil in Venezuela will spur a supply crunch in the US and that a war on Iraq will deepen shortages.

Unless there is a sharp price decline, the cartel is on track to lift output after January 14 via its mechanism that stipulates supplies be raised by 500,000 bpd if prices for a basket of OPEC crudes stay over $28 a barrel for 20 days.