abcnews.go.com — By Hassan Hafidh and Dominic Evans

BAGHDAD/LONDON (Reuters) - Saudi Arabia put out peace feelers over Iraq on Sunday as a British minister signaled fresh unease within Prime Minister Tony Blair's cabinet over joining a possible U.S.-led war against Baghdad.

The United States said it was more than doubling its troop strength in the Gulf region to 150,000 amid signs in Europe and the Middle East that many states were increasingly nervous about a possible rush to war and wanted all other options explored.

Saudi Arabia, a key U.S. ally and the Gulf region's economic powerhouse, said it did not believe there would be a war and disclosed it had proposed an initiative to fellow Arab states to resolve the crisis.

"There is no doubt that all the reasons point to a war but I personally believe there will not be a war... I see the fleets but, God willing, there will be no war," the kingdom's de facto leader, Crown Prince Abdullah, said in remarks carried by state television.

"Saudi Arabia has presented proposals to its brothers in Arab states and asked them to accept them and for them to be the basis of any summit. I believe if the (proposal) is accepted, then it will solve many problems," he said.

Britain's International Development Secretary Clare Short said on Sunday Britain should not join a unilateral U.S. attack on Iraq and said it was Britain's duty to restrain Washington.

Her comments took on added significance when sources said Blair would meet President Bush after a January 27 report by U.N. inspectors on Iraqi compliance with searches for arms of mass destruction.

POSSIBLE COUNCIL OF WAR

Blair has said the inspectors should be given time to deal with Iraq but British newspapers reported at the weekend that the meeting could turn into a council of war if Baghdad failed to satisfy U.N. teams on questions about its arms programs.

"I think all the people of Britain have a duty to keep our country firmly on the U.N. route, so that we stop the U.S. maybe going to war too early, and keep the world united," Short, one of the most dovish members of Blair's cabinet, told Britain's ITV network.

Blair and Bush are the chief prosecutors in the case against Iraq, saying they have intelligence that Baghdad possesses banned weapons and threatening war unless it comes clean.

Short's remarks underlined increasing disquiet within the ranks of Blair's Labor Party over going to war against Iraq without U.N. authorization or hard evidence against Baghdad.

For many countries, particularly in the Muslim world, the jury is out until clear proof is produced that Baghdad has biological, chemical or nuclear weapons.

Egyptian President Hosni Mubarak urged Iraqi President Saddam Hussein on Sunday to cooperate with U.N. inspectors to avert a devastating war.

"(Saddam) said, 'The weapons inspectors don't talk to us properly'. Put up with it to avoid the annihilation of the people," Mubarak counselled the Iraqi leader in remarks to reporters.

SADDAM URGES NEIGHBORS TO STOP WAR

Saddam himself said only Iraq's neighbors could stop the United States from declaring war on Baghdad.

"Inspection teams are here and our cooperation with them is continuing, but if America wants to look for a pretext for the aggression, only the countries of the region can prevent it," Saddam was quoted by Iraqi state television as saying during a meeting with Turkish Trade Minister Kursad Tuzmen.

Tuzmen carried a letter from Turkish Prime Minister Abdullah Gul urging Iraq to comply with U.N. resolutions in an effort to ward off military action.

European officials have spoken out against a rush to war on the basis of inconclusive weapons inspections, which resumed in late November after a four-year hiatus.

France, a veto-wielding member of the U.N. Security Council, has insisted on an international mandate for any military action, while Germany opposes an attack on Iraq.

U.N. inspectors say they have not found any evidence of active weapons programs in Iraq, but that Baghdad's arms declaration fails to answer a "great many questions."

Iraqi Vice President Taha Yassin Ramadan, in the government newspaper al-Jumhouriya, repeated accusations by Saddam last week that the inspectors were carrying out "intelligence" work, but said Baghdad would continue to cooperate with them.

"We know they are playing an intelligence role. The way they are conducting their inspections and the sites they are visiting have nothing to do with weapons of mass destruction," he said.

Amer al-Saadi, an adviser to Saddam, said two Iraqi scientists interviewed by U.N. inspectors last month had refused to leave the country for further interviews.

Against the backdrop of possible war in Iraq, the Organization of Petroleum Exporting Countries agreed in Vienna on Sunday to raise production to stave off a rise in oil prices threatened by a strike in Venezuela.

www.forbes.com Reuters, 01.12.03, 4:01 PM ET

CARACAS, Venezuela (Reuters) - A six-week strike by foes of Venezuelan President Hugo Chavez last week held international oil shipments by Venezuela, the world's No. 5 crude exporter, to about one-fifth of November levels.

Venezuela's oil exports were capped at about 550,000 barrels per day (bpd) for the week ending Jan. 11 compared with about 575,000 bpd in the previous week, according to calculations made by Reuters, based on data from shipping sources and state oil firm Petroleos de Venezuela (PDVSA).

The OPEC nation exported almost 2.7 million bpd of crude and products before the strike, which began Dec. 2. Chavez opponents, including thousands of PDVSA executives and managers as well as oil field workers, refinery staff, ship captains and dock workers, have joined the stoppage aimed at forcing the left-wing leader to step down.

Chavez has refused to resign and is trying to restructure PDVSA to restore the industry, which provides about one-half of government revenues. Replacement staff have boosted oil output to 800,000 bpd, Oil Minister Rafael Ramirez said Sunday, compared with 3.1 million bpd in November.

Striking PDVSA executives said the government has only been able to raise oil output to 400,000 bpd, from under 200,000 bpd at its lowest point. The dissident oil-firm employees said unqualified replacement workers have damaged installations and caused oil spills.

GOVERNMENT PLEDGES The loss of Venezuelan exports, which normally supply over 13 percent of U.S. oil imports, sent crude prices to two-year highs over $33 a barrel in recent weeks. Oil cartel OPEC held an emergency meeting in Vienna Sunday to increase oil quotas to compensate for the Venezuelan disruption.

"We have an agreement signed by all OPEC members to increase the ceiling by 1.5 (million bpd)," Venezuela's Ramirez told reporters at the OPEC meeting.

"OPEC countries committed themselves to defend and support our market share until such time that we can re-establish oil production levels in mid-February," Ramirez said, adding he expected Venezuela's output to hit 2.5 million bpd by then.

PDVSA President Ali Rodriguez, also attending the OPEC meeting, told reporters the 940,000-bpd Amuay-Cardon refining complex would be restarted and back to normal in two to three weeks. He said oil production would rise to 2 million bpd by the end of January.

Government attempts to restore the industry have met with mixed success. Ramirez said in late December that oil production would be increased to 1.2 million bpd by the second week of January, and that the 130,000 bpd El Palito refinery would be restarted early in the month.

PDVSA's Rodriguez said operations at El Palito would now resume after a seal blew in last week's attempt to restart the refinery.

In addition, the government may have a difficult time increasing exports even if oil output is raised.

Only ships chartered by PDVSA and U.S. refining affiliate Citgo have been loading cargoes for export since the strike started. Foreign lifters, concerned with insurance risks associated with vessels loaded by uncertified staff, have said they will not bring tankers to port until conditions are considered safe by insurance pools.

However, the government has managed to import some gasoline to help ease an acute domestic fuel crisis.

Chavez said on Friday he had fired 1,000 striking PDVSA employees and that he would use the stoppage to get rid of anti-government managers.

Dissident PDVSA leaders have said it would take four months to bring operations back to 90 percent of normal levels, and would only be achieved if all striking workers returned to their jobs.

Copyright 2003, Reuters News Service

business-times.asia1.com.sg January 13, 2003

Saudi Arabia says members are pumping more oil to replace lost Venezuelan output

(VIENNA) Members of the Organisation of Petroleum Exporting Countries (Opec) yesterday agreed to raise output at a special meeting in a bid to replace lost Venezuelan supplies and lower oil prices from close to two-year highs.

United Arab Emirates Oil Minister Obeid bin Seif al-Nasseri didn't provide details on the production increase, and further information wasn't immediately available.

Oil prices, now about US$30 a barrel, are expected by ministers to decline after the decision. Opec has a target range of US$22 to US$28 a barrel. Disruptions to Venezuela's exports and a possible war with Iraq boosted prices 44 per cent in London last year, the second-largest gain of the past two decades. Opec last week called its second meeting in a month, after crude oil prices in New York surged above US$33 a barrel.

Saudi Oil Minister Ali al-Naimi said members already are pumping more oil outside of their quota accord to replace lost Venezuelan output.

'There is no shortage. We never allowed the shortage to take place,' he told reporters earlier yesterday. 'There is a significant shortage from Venezuela, but there is no shortage in the international market.'

Saudi Arabia can increase production to more than 10 million barrels a day, from an estimated eight million barrels last month, within two weeks, the minister said. It would take 90 days to sustain supplies at 10.5 million, and the nation could go beyond that 'rather quickly', he said.

Ministers from Iraq, Libya, Kuwait and Iran didn't show up for the meeting yesterday. The Venezuelan government is struggling to maintain basic services as the six-week strike slows oil exports and production. Venezuelan oil production plunged by 2.3 million barrels a day in December to an average 700,000 barrels a day, according to Bloomberg estimates.

'We are increasing production,' said Ali Rodriguez, head of Venezuela's state-owned oil company, yesterday. 'Our objective is to reach a level in order to satisfy all our commitments to our customers.' He declined to give figures of the nation's output and said it's targeting a return to normal by the end of February. - Bloomberg

business-times.asia1.com.sg January 13, 2003

(OSLO) Oil tanker rates rose as companies and traders booked ships to carry oil from the Persian Gulf to the US at a faster pace to offset the halt in imports from strike-hit Venezuela.

A total of six very large crude carriers, or VLCCs, were booked for discharge in the US Gulf Coast as late as Feb 6, compared with two ships on Tuesday, R S Platou Shipbrokers AS said in note to clients. An additional 10 vessels were booked for discharge at Asian ports.

The 'situation is really worrying for US crude importers that normally take some 1.5 million barrels a day from' Venezuela, shipbroker Lorentzen & Stemoco said in a note. 'They have no choice other than approaching producers' such as Saudi Arabia and Kuwait to replace Venezuelan oil, it said.

Freight tariffs for two million-barrel supertankers, or VLCCs, measured in Worldscale points, an industry standard, rose to WS130 for cargoes of about 260,000 tons on the Persian Gulf to Japan leg, shipbrokers said. On Tuesday they were fixed as high as WS122.5, according to Bloomberg data.

Tanker demand has picked up as the strike in Venezuela, the fourth-biggest supplier to the US, is forcing oil companies and traders to book cargoes from other regions to cover their needs. The strike, now in its sixth week, is boosting utilisation rates of the crude oil fleet. The Organisation of Petroleum Exporting Countries may boost output to offset the loss of Venezuelan exports.

The VLCC market has 'rebounded strongly partially because of production increases by Middle East Gulf producers and also because of the vacuum created by the absence of Venezuelan crude in the market', shipbroker Fearnley's said in a market report.

Rates for one million-barrel ships, known as Suezmax tankers since they are the biggest to navigate the Suez Canal fully loaded with crude, rose 4.5 per cent to WS172.5 on the West Africa to US Gulf coast leg.

At Wednesday's rate levels, a modern VLCC will earn about US$70,000 a day, after deducting voyage-related costs such as fuel and port fees, analysts said. Frontline Ltd, the world's biggest operator of supertankers, had a break-even point of about US$21,000 in the third quarter for its VLCCs. - Bloomberg

sg.biz.yahoo.com Monday January 13, 4:13 AM By Fred Pals Of DOW JONES NEWSWIRES

VIENNA (Dow Jones)--Dealing with Venezuela right now but with Iraq in the background, OPEC at its extraordinary meeting in Vienna Sunday settled for a hike of its output ceiling by 1.5 million barrels a day to 24.5 million b/d, effective from Feb. 1.

ADVERTISEMENT And while the Organization of Petroleum Exporting Countries hopes supplies by strike-wracked Venezuela will gradually normalize and a U.S.-led war against Iraq won't materialize soon, the bottom-line is that OPEC wants the message out that it will make up for any loss caused by the Venezuelan crisis, analysts said.

On paper, Venezuela saved face with its new quota level under the terms of the pro rata hike across OPEC's 10 members, excluding Iraq. But it won't be able to meet its quota of 2.82 million b/d anytime soon.

"The deal is a nice finesse. It allows OPEC to make up for any shortfall and leaves Venezuela with the opportunity to say it is breaking a strike because it got a new quota," Raad Alkadiri, energy analyst at the Petroleum Finance Co. in Washington, said. It also avoids the troublesome issue of adjusting individual quota levels, Alkadiri added.

OPEC President Abdullah bin Hamad Al Attiyah added at the concluding press conference: "We have told Venezuela we won't take its market share."

Sunday's decision, he said, was aimed at ensuring "adequate supplies of crude to consumers and to restore balanced market conditions."

OPEC kingpin Saudi Arabia sided with the majority, although it had expressed earlier Sunday its concern of "flooding the market" if the ceiling was hiked. Sources hinted it had earlier sought an output rise divided between nine members, excluding Venezuela and Iraq, without changing the quotas.

Oil Prices Will Slip But Not By Much -Analysts

Given Venezuela's domestic crisis, most OPEC members think its supply won't return to its pre-strike 3 million b/d level any time soon. Venezuelan Oil Minister Rafael Ramirez and the head of state-run Venezuelan oil company Petroleos de Venezuela (E.PVZ), or PdVSA, Ali Rodriguez - a former OPEC President - set out to convince their colleagues that production of 2.5 million b/d would be reached in the country by mid-February. Al Attiyah just "hoped" Venezuela would reach that level. Venezuela, he said, was producing about 700,000 b/d currently.

Analysts have said it will take PdVSA months to get to 2.5 million b/d. A nationwide strike - which enters its seventh week Monday and is aimed at ousting President Hugo Chavez - has crippled operations at the oil giant and slashed production and exports to less than a third of their usual levels.

But despite OPEC's pledge to make up for any shortage caused by Venezuela, the prospect of war between the U.S. and Iraq means world oil prices won't come down much on Sunday's decision, analysts see. "I think it is dawning that war is to happen and prices will ease a bit but not a lot," Alkadiri said.

Yasser Elguindi, analyst with Medley Global Advisors in New York, agrees: "The market will take its time to let the message sink in there will be new barrels on the market. But prices won't ease significantly."

If a war against Iraq starts, a renewed OPEC pledge to make up for Iraqi shortfall, a timely release of U.S. strategic petroleum reserves and a seasonal downturn in consumption starting in the second quarter could quickly bring any price spikes under control, analysts said. Al-Attiyah made it clear that OPEC would meet in the event of war.

OPEC, he added, had more than 4 million b/d of spare capacity it could draw on if necessary. Iraqi production has been seen at slightly more than 2 million b/d. Global demand for OPEC output is seen at around 25 million b/d.

The issue from Monday, however, will be whether the crude oil price falls once the markets open. Many analysts say the move is, as so often the case at OPEC meetings, largely symbolic. That hike looks impressive on paper, yet much of it is accounted for by OPEC's rising pool of quota-busting.

If analysts are proven right over the next couple of months and oil prices remain stubbornly high, then this weekend's emergency meeting will, arguably, have failed to achieve OPEC's immediate goals.

OPEC's next regularly scheduled meeting is slated for March 11.

-By Fred Pals, Dow Jones Newswires; 0043-664-5446851; fred.pals.dowjones.com