abcnews.go.com — By Barbara Lewis

LONDON (Reuters) - Oil prices weakened on Tuesday after Mexico said it would increase crude exports, adding to an OPEC production hike, while traders speculated that U.N. talks might help to end a supply-choking strike in Venezuela.

London Brent crude futures stood at $30.07 a barrel, 13 cents down while U.S. light crude fell 21 cents to $32.05 a barrel.

Dealers and analysts said the market remained volatile and was unusually sensitive to news headlines that could trigger major buying or selling by big investment funds.

"It's a market which is having to digest an awful lot of news," said analyst Paul Horsnell of J.P. Morgan.

"Will Mexico increasing output solve the Venezuelan problem? No. Will talks with (UN secretary-general) Kofi Annan solve the Venezuelan problem? Probably not, but it's something to trade on while the market is waiting for the big headline, whether that's something on Venezuela or something on the Gulf," he added.

Prices gained more than half a dollar on Monday despite a weekend decision by the Organization of the Petroleum Exporting Countries (OPEC) to raise official production by seven percent to try to calm the markets and help to compensate for the effects of a protracted Venezuelan strike.

The general strike, which began on December 2, has reduced to a trickle exports from the world's fifth largest oil exporter and key supplier to the U.S. market.

OPEC ALONE NOT ENOUGH

Dealers on Monday expressed concern that the OPEC increase would do little to ease the supply shortage given that Venezuelan crude shipments take only around five days to reach U.S. shores compared with the four-to-six week sailing time from the Middle East.

However, late on Monday, non-OPEC Mexico said it would also increase crude exports by 120,000 barrels per day (bpd) to 1.88 million bpd.

Traders were also speculating that mediation by U.N. Secretary-General Kofi Annan could help to break the deadlock between Venezuelan President Hugo Chavez and opposition leaders.

Chavez is to hold talks on Thursday with Annan.

The United States is concerned that the loss of Venezuelan oil could aggravate the effects on the U.S. economy of a war against Iraq, which President Bush has threatened if Baghdad fails to disarm in line with U.N. Security Council resolutions.

Dealers said that oil markets had weakened slightly on hints that any U.S.-led attack on Iraq might be pushed back until later in the year, but at the same time the United States and its ally Britain have been maintaining pressure on Baghdad.

British Foreign Secretary Jack Straw said on Tuesday that Britain reserved the right to take military action against Iraq without a second U.N. resolution.

www.voanews.com VOA News 14 Jan 2003, 09:01 UTC

Venezuela's long-running general strike has contributed to a rise in global oil prices as the political strife in the South American nation enters its seventh week.

Crude oil on the New York Mercantile Exchange climbed to $32 per barrel Monday. In London, Brent crude was selling for more than $30 per barrel. Last week, prices reached $33 per barrel before OPEC announced its decision to boost production.

Analysts say the Venezuela unrest and the threat of a U.S. war with Iraq are contributing factors. Both nations are OPEC members.

On Monday, Venezuela's military fired rubber bullets and tear gas to disperse pro-government demonstrators in downtown Caracas. Similar incidents were reported in western Zulia state. Venezuela's opposition called the strike to force President Hugo Chavez to resign and call early elections. He refuses to give in to their demands.

Venezuela's energy minister said Monday the strike has cost the country four billion dollars. Venezuela is the world's fifth largest oil exporter. Meanwhile, President Chavez is expected to meet with U.N. Secretary-General Kofi Annan Thursday in New York to discuss Venezuela's political crisis.

International pressure is building for a solution to the conflict in Venezuela, which usually provides 13 percent of U.S. oil imports. South American leaders are preparing a compromise plan they hope to present to Venezuela to end the crisis. Brazil's new leftist President Luiz Inacio Lula da Silva and the secretary-general of the Organization of American States, Cesar Gaviria, are expected to discuss the plan Wednesday in Quito, at the inauguration of Ecuador's new president, Lucio Gutierrez.

Some information for this report provided by AP, AFP and Reuters.

www.globeandmail.com Associated Press

Rio de Janeiro — After only two weeks in office, Brazil's new president is indicating he is ready to shepherd through big changes — both at home, where he's raising hope for the poor, and abroad, where he wants his nation to take a greater role in international affairs.

Luiz Inacio Lula da Silva is scheduled to meet Wednesday with other Latin American leaders in Ecuador to form a “Group of Friends of Venezuela” aimed at resolving the crisis that has divided that country and crippled oil production in the world's fifth largest petroleum exporter.

Before leaving for Quito, Mr. da Silva plans to meet with Argentine President Eduardo Duhalde in Brasilia to discuss regional trade and the terms of a proposed hemispheric free trade zone.

Such an intense international presidential schedule is unprecedented in Brazil, where diplomatic efforts traditionally proceed at a snail's pace.

“He is creating a sense of movement,” said Stephen Haber of the Hoover Institution at Stanford University. “He has promised lots of change, and if he sits around and doesn't do much in the first 100 days, those expectations are dashed.”

Analysts say Mr. da Silva's rapid pace is even more striking coming so soon after last week's two-day trip to desperately poor areas in the country's northeast as part of his goal of reducing the hunger that affects between 20 and 44 million people in the nation of 175 million citizens.

“This activism in Brazil's diplomacy is new,” said William Goncalvez, a political analyst at the Federal University of Rio de Janeiro.

But it seems in line with Mr. da Silva's pledge to bring about changes for how Brazil is viewed domestically and internationally, and in keeping with signs in recent years that the country wants to play in the major leagues of foreign policy while developing new programs to help the country's poor.

In late December, Mr. da Silva sent one of his closest aides to Venezuela on a fact-finding mission that developed into the idea of creating a group of Latin American and European countries to assist mediation already under way by the Organization of the American States.

Foreign Minister Celso Amorim said Monday that Mr. da Silva is concerned about Venezuela and wants neighboring countries to help find a peaceful solution to the strike aimed at ousting Venezuelan President Hugo Chavez.

Some analysts believe Silva is also shaping a message to Washington — suggesting that the United States cannot impose its policies in the region.

“His goal is to signal that Brazil intends to be a leader, which given its economy and population makes perfect sense,” Mr. Haber said. “To the United States he is signaling that we are going to have an activist foreign policy not dictated by you to us.”

But Mr. da Silva is well aware that he must maintain an image showing he is dealing with pressing domestic issues. Just days after being inaugurated, he delayed for at least a year a $760-million (U.S.) plan to order 12 jet fighters needed by Brazil's air force.

In doing so, Mr. da Silva made it clear that his main funding priority for Brazil is the hunger eradication program. He even suggested that young Brazilian diplomats should regularly visit the Brazilian slums known as favelas — so they will learn about poverty firsthand and can better defend Brazil's interests abroad.

www.nationnews.com Tuesday 14, January-2003 by Robert Best

WITH THE OPPOSITION strike in Venezuela now more than six weeks old certain contrasts are revealing themselves among those who are demanding that President Hugo Chavez either resigns or calls early elections, and his supporters, The “Chavistas” who want him to stay.

For a start, the international news media, while making it difficult to accuse them of being partial towards the anti-Chavez protesters, have certainly been focusing more on these than on any elements that are supporting Chavez. This is most interesting since this trend comes in the wake of accusations within Venezuela itself, even before the anti-Chavez marchers had hit the road, that the Venezuelan media were anti-Chavez in much of their news coverage.

It has reached the point where a number of TV and radio stations have been attacked with the blame being placed on those who support the Venezuelan president. But it is not difficult to read between the lines with all that has been going on in the country.

For example, even when the international media carry pictures of the protesters, it is marked how better off those in the anti-Chavez ranks look compared with those who are rallying for the Chavez cause. We are seeing people in proper looking threads (clothes), some even wearing their jewellery as they march against Chavez compared with those who are shouting on his behalf, leaving no doubt by their appearance that they are among the country’s poor.

It comes over strongly in these pictures that while the anti-Chavez elements have been accusing him of dividing the country, with its more than 21 million people, the real “divider” is poverty.

Those who have been following developments in Venezuela will recall that reports from international agencies have noted that it is a country in which some 80 per cent of the population live below the poverty line. This is in a country that boasts of being the third largest oil producer in the Organisation of Petroleum Exporting Countries.

It is not difficult to understand why the 20 per cent who are better off see their way of life being threatened by signals sent by Chavez that he intended to do more to improve the living conditions of the poor, most of whom, it should be noted, are of native Indian origin.

A close look at the pictures coming out of Venezuela of those who have been queuing up outside the banks as the crisis there deepens, with the country’s bolivar currency taking a beating because of the long strike, leaves no doubt who really have money in the banks. This also accounts for the ability of so many of the middle class to keep up the strike pressure on Chavez, since they have been able to use their bank accounts like a “strike fund.” Now that the currency has began to slide it will be interesting to see how these protesters will react. Many of them will find themselves moving closer to that 80 per cent who are said to be below the “poverty line” if the strike drags on much longer.

It is still true that where a man’s treasure is, there will his heart be also, and we must now wait and see if the anti-Chavez protesters will have the heart to keep going for that much longer now that their protest to bring down Chavez is hitting them where “their way of life” is concerned.

Next door in Brazil, where socialist convert Lula da Silva has recently taken over as president with a strong promise, like Chavez, to improve the lot of his country’s poor, tentative steps have begun towards that end. But how what has been going on in Venezuela will affect Silva’s approach to the problem we can only guess.

Brazil is a country where it is reported that an estimated 54 million out of a population of 175 million live below the poverty line. This is a smaller percentage than Venezuela’s 80 per cent. It is not far-fetched to anticipate that should Silva make certain moves on behalf of the poor in his country, he could run into similar problems as Chavez has.

Silva was reported to have visited a number of poverty-stricken areas last week promising residents government programmes to end hunger and provide clean water; basics which have been lacking. He however told them that he cannot promise all their problems “will be solved from one day to the other.” He has given them, nonetheless, some hope. That is what Chavez has also given millions of poor in Venezuela. The problem ahead is that having held out that hope to the poor, it will not be easy, now there is some momentum, for those replacing him or ousting him, to put back the clock. It will be more of a challenge for those who are privileged, to continue in their comfort zone.

Hopes dashed deepen discontent and discontent courts strife. This is the path that beckons Venezuela if all involved are not careful. Chavez has really not been able to do much so far to help the poor. Yet that 80 per cent poor will be determined that more of that oil wealth trickles down.

www.nydailynews.com By TOM VAN RIPER SPECIAL TO THE NEWS

There's not much relief likely at the gas pump anytime soon, despite OPEC's action on Sunday to raise its daily oil production by 6.5%.

Crude oil prices moved up nearly 2% yesterday to $32.26 a barrel, as traders remained skeptical that the new production would make much difference right away. Oil prices have increased 64% during the past year.

Analysts said that retail gas and heating oil prices are likely to continue to rise. In New York, the average price at the pump of regular gas hit $1.67 yesterday, compared to $1.63 a month ago and $1.29 a year ago.

"It generally takes about three to six weeks for output changes to show up at the pump," said AAA spokesman Robert Sinclair, who added that demand for jet fuel and home heating oil could prevent any early rollbacks in gasoline prices.

"You have an increase in air travel after the post-Sept. 11 lows, and a cold winter thus far in the New York region. This means more competition for crude oil," he said.

In an emergency meeting on Sunday, OPEC agreed to raise production by 1.5 million barrels a day in response to the supply loss caused by a strike in Venezuela that has now reached its sixth week.

"The market is suspicious that this move by OPEC will fix the problem," said George Gaspar, oil analyst at Robert Baird & Co. "Venezuela is still the key. They have not only stopped the refining down there, they have stopped drilling. Even if the strike ends tomorrow, there would still be a significant amount of time needed to ramp up again."

Oil traders also bid up prices yesterday after reports that two Norwegian oil fields in the North Sea would close due to technical problems. This could further trim world oil supplies, despite the OPEC production increase. Originally published on January 14, 2003