asia.reuters.com Thu March 13, 2003 11:24 AM ET By Sujata Rao

LONDON (Reuters) - World oil prices came off their recent highs on Thursday as the United States said efforts to garner support for a new U.N. resolution on Iraq could extend into next week, potentially further delaying a Middle East war.

Oil traders said however that despite the downturn, sentiment was bullish because the looming war on oil producer Iraq and shrinking energy stockpiles in the United States, the world's largest crude consumer, continue to raise supply security fears.

London benchmark Brent crude oil fell 35 cents to $33.56 a barrel while U.S. light crude was 33 cents down to $37.50.

"There is a bit of consolidation going on but basically there is still a bias to the upside -- people are concerned about security of supply issues," said Kevin Norrish, energy analyst at Barclays Capital.

"We are not moving into a higher price band just yet because of this uncertainty on the (U.N.) vote," one oil trader said.

Still lacking Security Council support, the White House said on Thursday diplomatic efforts could spill over into next week. Its main ally Britain offered a new concession by offering to drop a demand for President Saddam Hussein to appear on Iraqi television and own up to past illegal weapons programs.

France repeated its opposition to giving Saddam any ultimatums and said it was prepared to kill any such resolution by using its veto.

Members of the U.N Security Council are to meet at 2000 GMT to discuss the new British proposals.

Prices rose on Wednesday as the fall in U.S. stocks combined with worries that oil cartel OPEC would not be able to compensate for lost Iraqi exports in event of war.

Latest U.S. data showed crude inventories falling last week to a 27-year low. There were also sharp drops in gasoline inventories, which ought to be growing as stockbuilding starts for the summer driving season.

Analysts say core oil stocks are now 89 million barrels below normal.

"Given the reported ramping of OPEC production and the continued recovery of Venezuelan production, the shortfall is shocking," SG Securities said in a research note.

The Organization of the Petroleum Exporting Countries has stepped up output this year to cover an outage of crude from Venezuela, where an anti-government strike brought production to little more than a trickle in December and January.

Venezuela, normally the fifth-biggest exporter providing about 13 percent of U.S. oil imports, has increased shipments of crude and oil products though rebel oil workers say production is still less than half of normal levels.

WAR TIMING KEY AS SPRING ADVANCES

Analysts say timing is now key for the war because oil demand is generally two million barrels lower in the second quarter of the year as spring advances and the loss of Iraqi crude will not be as acutely felt as now.

"The more the war gets delayed the less the potential for price spikes," Barclay's Norrish said.

The West's energy watchdog the International Energy Agency says the OPEC cartel likely lacks enough capacity to compensate immediately for the loss of Iraqi and Kuwaiti oil.

It said in its monthly report that the global oil system was "running on empty" and that a further supply disruption would "tax a system running close to capacity."

OPEC however has pledged to guarantee supplies should war break out and Saudi Oil Minister Ali al-Naimi reiterated on Thursday OPEC's ability to deliver oil in case of war in Iraq.

A further note of relief for soaring prices came from an end to freezing U.S. temperatures which have supported heating oil prices at near record levels in recent weeks. Oil traders said a sell-off on heating oil futures was exerting downward pressure on crude.

www.oaklandtribune.com108341241236,00.html Article Last Updated: Thursday, March 13, 2003 - 7:26:01 AM PST By Mark Shenk - Bloomberg News

NEW YORK -- Crude oil futures closed at a 12-year high for the third time in two weeks after an Energy Department report showed an unexpected decline in U.S. inventories.

Supplies last week fell 1.4 percent to 269.8 million barrels, the department said. Inventories were 16 percent lower than a year earlier and close to a 28-year low. Analysts surveyed by Bloomberg expected an increase of about 1.5 million barrels. The decline came as the U.S. prepares to attack Iraq, which pumps about 3 percent of the world's oil.

"This is a big problem," said John Kilduff, senior vice president of energy-risk management at Fimat USA Inc. in New York. "You don't want to have low oil inventories when the country is about to go to war."

Crude oil for April delivery rose $1.11, or 3 percent, to $37.83 a barrel on the New York Mercantile Exchange, the highest closing price since Oct. 16, 1990, when the Iraqi occupation of Kuwait cut off exports from both countries.

Prices reached $39.99 a barrel during trading on Feb. 27, the highest intraday price since October 1990, when futures rose to a record $41.15.

In London, the April Brent crude-oil futures contract rose 62 cents, or 1.9 percent, to $33.91 a barrel on the International Petroleum Exchange.

Crude-oil imports fell 12 percent to 7.62 million barrels a day in the week ended March 7, the weekly report on petroleum inventories, production and imports said.

"This is as bad as it gets," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York, which markets gasoline and heating oil to local distributors. "Supplies are very tight."

Analysts had expected that rising imports from Venezuela and Saudi Arabia would send inventories higher.

A strike in Venezuela had been limiting shipments to the U.S.

Venezuela pumped about 3 million barrels of oil a day before the strike began in December and now is pumping 2.7 million barrels a day, according to the Venezuelan government.

Striking oil workers say production is closer to 1.9 million barrels a day.

"The decline in imports makes me dubious about Venezuelan output claims," Kilduff said. "Their production can't possibly be what they claim if our imports are down so much. We are their main customer."

www.stuff.co.nz 14 March 2003

SINGAPORE: Oil prices held strong on Thursday, consolidating a US$1 gain after the US government reported a decline in fuel stocks, leaving only a thin supply cushion to cover US needs if war should break out in Iraq.

US light crude rose two cents to $37.85 a barrel, just $3.30 below a record high of $41.15 set during the 1990-91 Gulf crisis.

Latest data from the US Energy Information Administration (EIA) underpinned concerns over a possible supply crunch in the world's biggest oil consumer, as Washington remains poised to launch an invasion of Iraq, the eighth-largest crude exporter.

The EIA reported US crude inventories falling almost four million barrels to 269.8 million, below the government's suggested level for smooth operations and matching a 27-year record low hit in early February.

"Given the reported ramping of Opec production and the continued recovery of Venezuelan production, the shortfall is shocking," SG Securities said in a note.

The Organisation of the Petroleum Exporting Countries has stepped up output this year to cover an outage of crude from Venezuela, where an anti-government strike brought production to little more than a trickle at one point.

Venezuela, normally the fifth-biggest exporter providing about 13 per cent of US oil imports, has increased shipments of crude and oil products as the two-month strike to topple President Hugo Chavez has crumbled.

Rebel oil workers pegged oil exports at 1.14 million barrels per day (bpd) in early March, still well below the 2.7 million bpd it shipped before the strike began in early December.

Crude has risen 20 per cent this year on concerns that a war in Iraq could upset oil supplies from the Middle East.

With about 300,000 US and British troops in the Gulf region, US officials said Iraqi President Saddam Hussein had "days, not weeks" to prove he had complied with UN demands for Baghdad to give up all weapons of mass destruction.

Opec, which controls 60 per cent of world crude exports, pledged earlier this week to ensure adequate supplies should war break out.

But the International Energy Agency, adviser on energy to 26 industrialised nations, said in its monthly oil market report on Wednesday that Opec's spare production capacity had been squeezed to 900,000 bpd following the recent output increases.

"This is less than the potential loss of supply in the event of war in Iraq," said the Paris-based IEA.

Iraqi output, running at 1.7 million bpd over the past month, would be expected to be halted in the event of war. In addition, Kuwait has said it might need to suspend as much as 700,000 bpd as a precaution.

"The market is heading into a period of heightened uncertainty with low stocks and limited spare production and shipping capacity. A further supply disruption would tax a system operating at close to capacity," the IEA said.

¿Tiene HUGO CHAVEZ, el errático hombre fuerte de Venezuela, relaciones amistosas con terroristas? Es una acusación que le lanzan sus opositores de ultra derecha, hasta con poca o ninguna evidencia. Ahora la pregunta se hace más frecuente.

En una conferencia en Miami la semana pasada, el General James Hill, quién, como Comandante del Comando Sur en el soldado más importante de los Estados Unidos para América Latina, habló de sus preocupaciones sobre Margarita, una isla turística venezolana en el Caribe. Dijo que era un nicho para activistas de los grupos extremistas del Medio Oriente, Hamas y Hizbullah. El mes pasado, Hasil Rahaham, un musulman venezolano quién es sospechoso de tener vínculos con al-Qaeda, fue arrestado en el aeropuerto de Gatwick en Londres después que fue descubierta una granada en su equipaje. Había abordado el vuelo en Caracas. Días después, poderosas bombas causaron daños a las embajadas de Colombia y España en Caracas. La oposición culpa a los simpatizantes radicales de Chávez.

El presidente, quien sobrevivió a un paro general de dos meses, alega estar llevando a cabo una "revolución bolivariana". Su historia política de nacionalismo radical le ha propinado amistades pintorescas: es difícil juzgar si éstas son ingenuas o son algo más siniestro. Cuando era un jóven oficial, tenía relaciones cecanas con guerrillas venezolanas relacionadas con Saddam Hussein y Corea del Norte. Después de ser electo democráticamente como presidente de Venezuela en 1999, mantuvo correspondencia amistosa con Ilich Ramírez Sánchez (“Carlos El Chacal”), un conocido terrorista venezolano que cumple cadena perpetua en una cárcel francesa.

En el año 2000, Chávez se convirtió en el primer líder extranjero en visitar Baghdad desde la Guerra del Golfo. Criticó el ataque americano a Afganistán diciendo "no se puede luchar contra el terror con terror". Sus simpatizantes más radicales exigen que Chávez se oponga a cualquier ataque a Irak y ven con desdeño sus actuales proposiciones amistosas a los Estados Unidos, que incluyen una promesa de continuar abasteciéndolo de petróleo.

Nada de ésto es evidencia contundente de que haya una complicidad presidencial con el terrorismo. Pero agentes de inteligencia venezolanos dicen que el gobierno de Chávez le ha dado baja prioridad a las operaciones para seguirle la pista a sospechosos de terrorismo. Sospechan que la comunidad árabe en Margarita levanta fondos para el terrorismo -pero en el Medio Oriente, no en Venezuela.

Los alegatos de terrorismo no son nuevos en América Latina. Oficiales americanos hace tiempo observan a los comerciantes levantinos del área fronteriza triple entre Argentina, Brazil y Paraguay. El 7 de marzo, un juez argentino le pidió a la Interpol arrestar a cuatro ex oficiales iraníes en conexión con un bombardeo en 1994 de un centro comunitario judío que acabó con la vida de 85 personas. Iran niega conexión alguna con el hecho.

Posiblemente los alegatos más dañinos (que él refuta) son sus nexos con los grupos guerrilleros de la vecina Colombia. Chávez ha declarado que Venezuela es “neutral” en el conflicto entre el gobierno democrático de Colombia y los rebeldes financiados por la droga. Esto no le cae bien a los colombianos.

Colombia está particularmente molesta por la negación de Venezuela de aunarse a las operaciones anti-guerrilleras en la porosa zona fronteriza. Álvaro Uribe, Presidente de Colombia, dijo recientemente que su gobierno "está listo para atrapar a los terroristas que maltraten al pueblo colombiano, desde Venezuela o desde cualquier lugar donde se estén escondiendo." Esta semana, el comandante de las Fuerzas Armadas de Venezuela respondió que sus tropas sacarían a cualquier rebelde que cruzara la frontera.

Uribe también quiere que Venezuela defina a las guerrillas de izquierda de las FARC y del ELN como terroristas. El Canciller de Venezuela dice que ésto equivaldría a "interferir" en asuntos colombianos. Pero los colombianos destacan que Chávez frecuentemente describe como “terroristas” a sus propios opositores políticos.

Oficiales de ambos países dicen que la guerrilla utiliza a Venezuela para abastecerse y como corredor de transporte, así como para extorsionar fondos de sus hacendados. Chávez ha disminuido la clasificación de la seguridad fronteriza. El General de mayor rango del ejército (desempleado actualmente por su disidencia política) alega que hay campamentos de la guerrilla colombiana dentro de Venezuela.

Mientras se mantiene preocupado con Irak, los Estados Unidos han estado muy relajados con respecto a Chávez (a pesar de que solo le faltó aplaudir un golpe militar contra él en abril). Pero los americanos dan mucha ayuda militar a Colombia. Y el terrorismo es un tema sobre el cual no aceptarán ambivalencia de parte de Chávez.

Traducción: Jessica Rosenberg

IS HUGO CHAVEZ, Venezuela's erratic strongman, friendly with terrorists?

It is a charge sometimes hurled at him by his more diehard conservative opponents, so far with little or no evidence. Now the question is more widely asked.

At a conference in Miami last week, General James Hill, who as commander of Southern Command is the United States' top soldier for Latin America, talked of his worries about Margarita, a Venezuelan tourist island in the Caribbean. He said it was a haven for activists from two Middle-Eastern extremist groups, Hamas and Hizbullah. Last month, Hasil Rahaham, a Venezuelan Muslim whom police suspect of links to al-Qaeda, was arrested at London's Gatwick airport after a grenade was found in his baggage. He had boarded the flight in Caracas. Days later, powerful bombs damaged the Colombian and Spanish embassies in Caracas. Opponents blame radical supporters of Mr Chávez.

The president, who has survived a recent two-month general strike by the opposition, claims to be leading a “Bolivarian revolution”. His political history of radical nationalism gave him colourful friendships: it is hard to judge whether these involved naivety or something more sinister. As a young army officer, he was close to Venezuelan guerrillas with links to Saddam Hussein and North Korea. After being democratically elected as Venezuela's president in 1999, he exchanged cordial letters with Ilich Ramírez Sánchez (“Carlos the Jackal”), a notorious Venezuelan terrorist serving a life sentence in a French jail.

In 2000, Mr Chávez became the first foreign leader to visit Baghdad since the Gulf war. He criticised the American attack on Afghanistan, saying “you can't fight terror with terror”. His more radical supporters demand that Mr Chávez oppose any attack on Iraq, and have looked askance at his current overtures to the United States, which include a promise to keep supplying it with oil.

None of this amounts to credible evidence of presidential complicity in terrorism. But Venezuelan intelligence agents say that operations to keep track of terrorist suspects have been given a low priority by Mr Chávez's government. They suspect that the Arab community in Margarita raises funds for terrorism—but in the Middle East, not Venezuela.

Claims of Middle-Eastern terrorism are not new in Latin America. American officials have long been watching the Levantine traders of the “tri-border” area where Argentina, Brazil and Paraguay meet. On March 7th, an Argentine judge asked Interpol to arrest four former Iranian officials in connection with a 1994 bombing of a Jewish community centre, which killed 85 people. Iran denies any involvement.

Probably more damaging to Mr Chávez are claims (which he denies) that he is friendly to guerrilla groups in next-door Colombia. Mr Chávez has declared Venezuela “neutral” in the conflict between Colombia's democratic government and its drug-funded rebels. That goes down badly with Colombians.

Colombia is especially annoyed at Venezuela's refusal to agree to joint anti-guerrilla operations along the porous border. Álvaro Uribe, Colombia's president, said recently that his government is “ready to fetch the terrorists that mistreat the Colombian people, from Venezuela or from whatever place they may be hiding”. This week, Venezuela's army chief replied that his troops would indeed drive out any rebels who cross the border.

Mr Uribe also wants Venezuela to define the leftist guerrillas of the FARC and ELN as terrorists. Venezuela's foreign minister says this would be “interference” in Colombian affairs. But Colombians note that Mr Chávez often describes as “terrorists” his own political opponents.

Officials from both countries say that the guerrillas use Venezuela for supplies and as a transport corridor, as well as extorting funds from its ranchers. Mr Chávez has downgraded border security. The army's most senior general (jobless because of his political dissidence) claims that there are three Colombian guerrilla camps inside Venezuela.

While it has been preoccupied with Iraq, the United States has been relaxed about Mr Chávez (although it all but applauded a military coup against him last April). But the Americans give much military aid to Colombia. And terrorism is an issue on which they are unlikely to welcome ambivalence from Mr Chávez.