www.iranmania.com Saturday, January 11, 2003 - 2002 IranMania.com

Tehran, Jan 10 - Former president Akbar Hashemi Rafsanjani said here Friday that US faced many troubles at home, including a whopping foreign trade deficit and insecurity, but it was trying to preserve its hegemony over the world by resorting to threats and terror, IRNA said.

"One should not be intimidated by America which is grappling with economic, cultural, social and educational problems at home," he told thousands of worshipers at weekly Friday prayers.

"The country (US) which always used to have massive surplus trade revenues, is now faced with about 4,500 billion dollars of foreign trade deficit, with interest rates not included."

Rafsanjani, who is the chairman of the arbitrative Expediency Council, said that the American government's budget deficit had piled up to 4,000 billion dollars over the past 20 years. Its debts to the private sector amounts to 32,000 billion dollars and current unemployment rate in the US stands at six percent, he added.

"America's security condition has also worsened very much. Phone taps have increased, surveillance cameras have been set up in sensitive junctions and subways of the country to control people and travel to America has become more problematic," Rafsanjani added.

"All these together have led to a 60 percent decline in foreign investments in America," the cleric said.

Rafsanjani said the American bullying had scared many countries, including certain individuals in Iran who believed in a concession to the United States.

"Many have now become scared. Even in Iran, there are certain puppets who think nobody can confront America and thus there must be a concession," he said, adding "America has instilled this terror into many hearts and is trying exploit this atmosphere of terror".

Rafsanjani denounced US' controversial policies, especially in the case of Iraq which Washington has threatened to attack if Saddam Hussein failed to expose the country's alleged weapons of mass destruction.

"America claims that it wanted to set the people of Iraq, Iran, Saudi Arabia, Pakistan and Venezuela free, but these people will never tolerate American hegemony.

"If Iraq is released from the yoke of the Baath party, will the freedom-seeking Muslim Iraqi people tolerate a hand-picked government in their country?

"Either disintegration of Iraq or its transformation into a federal or free government will prejudice American interests," Rafsanjani said.

"America has many problems in view of all these controversies and its dreams will never come to reality. Meanwhile, we will definitely gain victory if we pay the cost of remaining on the divine track with fortitude," the cleric added.

www.iranmania.com Saturday, January 11, 2003 - 2002 IranMania.com

TEHRAN, Jan 10 (AFP) - Venezuelan President Hugo Chavez is "concerned" about apparent plans by OPEC nations and other oil producers to raise crude output, Iranian television reported Friday.

Chavez, in a telephone call to President Mohammad Khatami, said he was "concerned by an increase in production by OPEC and by certain (other) producing countries," the report said.

There was no indication of when the telephone call was made, or exactly what Chavez's concerns were.

Both Venezuela and Iran are members of the Organization of Petroleum Exporting Countries.

For his part, Khatami was quoted as insisting on the need for "cooperation among OPEC countries to ameliorate the sistuation in the oil market."

He added that "producers, whether OPEC members or not, should cooperate" and that "any disagreement would be prejudicial" to them.

OPEC members are to hold an extraordinary meeting in Vienna on Sunday and are widely expected to raise output by between one and two million barrels per day.

The markets have been squeezed in recent weeks by a strike in Venezuela and by fears of a war on Iraq.

www.canada.com Canadian Press Saturday, January 11, 2003

CALGARY -- Canadians should brace for wild price swings at the gasoline pump in the next few months, with a potential average fuel price of 84 cents a litre, says a new report from the TD Bank.

With the cost of gasoline linked closely to world oil prices, the social turmoil in Venezuela and ongoing threat of war in Iraq will likely lead to volatile price fluctuations, said TD senior economist Craig Alexander.

"A war with Iraq could push the national average price of gasoline up to 84 cents a litre or higher depending on how the conflict unfolds," Alexander said in his report.

Across Canada, the average price of regular gasoline this week was 76.3 cents a litre.

In Vancouver, many stations were selling regular fuel for 75.9 cents per litre.

"Conversely, a resumption of oil exports from Venezuela and an avoidance of a conflict with Iraq would likely see gas prices drop to 66 cents a litre or lower."

In a national survey released this week from Calgary-based MJ Ervin & Associates, Yellowknife logged the highest prices for regular gas at 91.9 cents per litre. Winnipeg was the lowest at 67.5 cents per litre.

The TD bank report warns that if the U.S. does attack Iraq before the Venezuela situation is resolved, oil prices go up to $40 to $50 US per barrel.

And using the rough calculation that each $1 US rise in the price of crude increases Canadian gasoline prices by about one cent, crude at $40 US would create an average pump price of 84 cents.

© Copyright  2003 Vancouver Sun

www.boston.com By Associated Press, 1/11/2003

WASHINGTON - The Bush administration called on the international community yesterday for help in resolving the five-week strike in Venezuela that is crippling oil exports, promoting violence, and threatening the stability of the government of President Hugo Chavez.

''The severe damage being caused to Venezuela's economy, as well as the increasing likelihood of violence and civil conflict, requires a solution,'' said White House press secretary Ari Fleischer.

He said the United States continued to support mediation efforts by Cesar Gaviria, secretary general of the Organization of American States, ''to facilitate a dialogue between both sides that leads to a peaceful, democratic, constitutional and electoral solution to Venezuela's crisis.''

Meanwhile in Venezuela, Chavez fired 700 workers from the state oil monopoly, hoping to break the strike, which has paralyzed the world's fifth-largest oil exporter.

At least 30,000 of the 40,000 workers at Petroleos de Venezuela S.A. are participating in the strike to demand early presidential elections. Chavez already had sacked 300 managers of the company.

''The revolutionary government is standing firm,'' Chavez said. ''An oligarchy ... has reared like a poisonous serpent to destroy the path of justice that we are paving. The people and our morals won't let them.''

The firings inflamed an already unstable situation. Chavez's opponents took to the streets yesterday. Bank workers and other opposition sympathizers were rallying in Caracas and 11 other cities yesterday, a day after violence broke out at similar protests. Hundreds gathered in Caracas to march on the Melia hotel, where Gaviria is staying.

The Central Bank suspended dollar auctions for a second day after the currency, the bolivar, dropped to a record low of 1,593 to the dollar Thursday, 5 percent weaker than Wednesday and down 12 percent this month.

Analysts speculated that Chavez's government may have to devalue the bolivar to balance its budget. Most government income is in dollars, and a weaker bolivar would increase its domestic spending power.

The Bush administration is working with the Organization of American States and member nations to peacefully end the standoff between the Chavez government and its opponents, Fleischer said. He pointed out that Gaviria has been quietly discussing options with other OAS states, including formation of a ''Friends of Venezuela'' group ''to help the Venezuelans find a solution.''

The Washington Post reported yesterday that the United States was putting aside its reluctance to get involved in Venezuela's internal affairs and readying an initiative to form a group of nations to try to end the deadlock.

The initiative may be rolled out next week, the newspaper said. It said the proposal's immediate goal would be to end the strike. The group would seek to develop a compromise calling for early Venezuelan elections and building on OAS mediation efforts already under way, the newspaper said.

This story ran on page A14 of the Boston Globe on 1/11/2003.

cbs.marketwatch.com By Myra P. Saefong, CBS.MarketWatch.com Last Update: 3:57 AM ET Jan. 11, 2003

VIENNA, Austria (CBS.MW) -- The Organization of Petroleum Exporting Countries will likely agree to boost production at an emergency meeting this Sunday but with little spare capacity, the cartel's decision might not carry much weight if the market loses Iraqi oil, analysts say.

"Spare capacity is not sufficient to offset losses from Iraq and Venezuela," said Thorsten Fischer, an energy economist at Economy.com.

OPEC's untapped output, excluding OPEC members Venezuela and Iraq, is 2.7 million barrels per day, he said. Output from Iraq totals 2.4 million barrels per day and Venezuela's pre-strike output was at around 2.9 million barrels per day.

So in the event of a U.S. war with Iraq and a disruption of oil exports out of the country, the market could lose a total of more than 5 million barrels a day -- only half of which can be made up by other OPEC oil producers, according to Fischer.

The total amount lost would represent about 6 percent of the world's oil demand of 78 million barrels a day.

OPEC agreed earlier in the week to hold the special meeting just a month after members decided to raise their production quota to 23 million barrels a day from 21.7 million, in an effort to lower actual production, which was running well above 24 million. See related story.

But, if OPEC uses 1.5 million barrels per day of spare capacity to make up for Venezuela, "there won't be much available to make up for any loss from Iraq," said Todd Hultman, president of DailyFutures.com, a commodity information provider.

The cartel doesn't expect to implement an output hike until at Feb. 1 and has said it would cancel the move if Venezuela's situation were resolved.

And since shipments take at least five weeks to arrive in the U.S., "there would not be any actual relief in the U.S. until sometime in March," Hultman said.

Output hike range

With that in mind, analysts predict that a number of factors will affect the size of OPEC's ultimate output increase.

Saudi Arabia, the OPEC member with the largest spare capacity -- around 2 million barrels per day -- backs an output hike of around 1.5 million to 2 million barrels. If OPEC uses 1.5 million barrels per day of spare capacity to make up for Venezuela, "there won't be much available to make up for any loss from Iraq."

Todd Hultman, president of Dailyfutures.com     

"OPEC member states currently operating at or near capacity are less likely to vote for a production increase, while Saudi Arabia is more likely to lobby for a more aggressive hike in OPEC's official quota," said Michael Armbruster, an analyst at brokerage house Altavest Worldwide Trading.

The latest data on U.S. supplies failed to reflect much of an impact from the Venezuelan strike, with the U.S. Energy Department even reporting that crude supplies rose by 400,000 barrels during the week ended Jan. 3. The data may tilt oil producers toward favoring a smaller hike. See full story.

Then there's OPEC's price band agreement to consider, said Fischer. It's not clear where that fits into the picture, given that OPEC's start date for its probable output hike isn't until Feb. 1.

The cartel's basket price, or the average price of seven types of crude oil, has been above $28 a barrel for 18 days as of Friday, according to Dow Jones.

OPEC's agreement calls for the addition of 500,000 barrels per day if the price holds above $28 for more than 20 days, making Tuesday the trigger date for a hike.

Quick Iraqi war scenario "Oil prices will likely rise in the run up to a war with Iraq, despite OPEC's commitment to increase production, which will at best dampen price increases."

Thorsten Fischer, economist at Economy.com     

Another scenario to consider: following a successful U.S. and allied attack on Iraq, there's a chance the oil market will see prices collapse and supplies overflow -- a prospect that could scare OPEC into increasing quotas by "substantially less than the 2 million barrels advocated by Saudi Arabia," said Fischer.

Still, it's doubtful any U.S. attack on Iraq will occur before Venezuela is on its way to restore production close to pre-strike levels, he said.

"The strike in Venezuela and the Jan. 27 deadline for weapons inspectors now seem to suggest that the U.S. will strike at the earliest in February," he said.

On Jan. 27, Chief U.N. weapons inspector Hans Blix will provide a detailed assessment of Iraq's compliance with the weapons inspections that began just before Thanksgiving.

"Oil prices will likely rise in the run-up to a war with Iraq, despite OPEC's commitment to increase production, which will at best dampen price increases," Fischer said.

He expects prices to average around $35 per barrel during the first quarter, with prices "substantially" higher ahead of a war and well below that after a successful attack.

Once the war has ended and Iraqi President Saddam Hussein is removed from power, "Iraqi production should increase considerably from current levels," said EnergyTrendAlert.com chief trading strategist, Grady Garrett.

"The speed of Saddam's departure is crucial to getting oil prices down in any meaningful way," he said.

Reserves to the rescue

For now, with the cartel's production hike likely to fall short, the only safety for the U.S., which consumes around 20 million barrels per day, is its Strategic Petroleum Reserve. "The Strategic Petroleum Reserve remains the only source of crude oil that would be available on short notice to consumers in the U.S." Thorsten Fischer      "The Strategic Petroleum Reserve remains the only source of crude oil that would be available on short notice to consumers in the U.S.," said Fischer.

Hultman pointed out that with OPEC showing its willingness to help out at its meeting Sunday, "it would not be unreasonable to expect the president [will] release crude supplies to coincide with an attack on Iraq."

At 600 million barrels, the reserve is currently near its full capacity.

But, President Bush won't likely release the reserve oil immediately upon the outbreak of a war with Iraq, said John Person, head financial analyst at Infinity Brokerage Services.

And it's probably best that he doesn't, Person said, emphasizing that the oil could be of more use in the event that Hussein decides to sabotage his country's oilfields and blame the U.S., and supplies are disrupted from other Arab nations.

"There are lots of doom and gloom prospects out there," he said.

Overall, however, major industrialized countries have the ability to release around 12.9 million barrels per day from reserve stocks for a month, with that amount falling to 9 million barrels per day in the second month, Person said, citing data from the West's energy watchdog, the International Energy Agency.

OPEC fears these stockpiles could be released once members increase production and start shipping more crude, he said. That would cause prices to fall below their ultimate target price of about $25 a barrel.

"The meeting will be a debate to find the balance between increased production and the ramifications on prices if the government stockpiles are released." John Person, head financial analyst at Infinity Brokerage Services      With those concerns, OPEC may decide on a more modest increase in supplies, on the order of 1 million to 1.5 million barrels per day, said Person. Little spare capacity would put a damper on any cheating, he added.

"The meeting will be a debate to find the balance between increased production and the ramifications on prices if the government stockpiles are released," he said.

Then again, said Dailyfutures.com's Hultman, all these concerns could end in just the "twinkle of an eye" if Venezuela's military switches sides, ending the strike and Iraq's Hussein suddenly flees the country.

"Venezuela and Iraq could be back in the oil business and the crude problem would be over," he said. "That is often how these things go."

Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.