Mondo Washington by James Ridgeway April 1st, 2003 12:00 PM

The longer the Iraq war drags on, the better for OPEC. Originally fearing a big American intervention in the oil market, Middle Eastern oil experts are breathing sighs of relief. A top government source in Tehran told the Voice last weekend that Iran now doesn't think the U.S. can trash OPEC, which is fine by the Iranians. Tehran is trying to stay out of the war—if anything, it wants to achieve a modest accommodation with the U.S. The Iranian betting is that the U.S. will have its work cut out just getting the Iraqi oil fields to produce enough to run the country, let alone threaten anybody else. This seems to be a common view among Middle East oilmen. And holding an angry population at bay, the Americans will leave the oil business in the hands of Iraqi technocrats. That leaves them sitting ducks to be picked off by a new dictator, but presumably one picked by the U.S.

The world is awash in oil, and OPEC currently has its hands full trying to keep the price above $25 a barrel so as to guarantee decent returns to the producing countries, as well as a decent return for the Texas independent producers.

The Iraqi oil fields are so dilapidated it will take years to modernize them. Oil industry planners believe Iraq sometime in the future will be able to produce 6 million barrels a day. Before the current hostilities began, production stood at half that amount.

The ideologues around Bush originally dreamed of turning Iraq into an American oil reservoir that could rival any in the world. The Middle East produces some 30 percent of the world's oil, and two-thirds of all reserves are in that region. In 20 years, half the world's exports will come from the area. Saudi Arabia is the largest producer and sits on one-quarter of the world's oil reserves.

The idea was that Iraq, with a modernized industry, could produce quantities of oil sufficient to rival the Saudis. U.S. control of Iraqi oil would not only open up a new supply for the U.S.—where it is anticipated that oil imports will provide two-thirds of the total needs by 2020—but it could also end up changing the entire structure of the energy business. Control of Iraqi oil would allow the U.S. to wield a major counterweight to OPEC, allowing the U.S., not OPEC, to force prices up and down. It would lessen the importance of Saudi Arabia and give the U.S. added clout in its dealings with Russia, Venezuela, and West Africa.

But these bright hopes may well become pipe dreams.

Additional reporting: Phoebe St John, Joanna Khenkine, and Mosi Secret

<a href=www.tulsasportsweb.com>URL By: Chris Harmon 04.01.2003

Oswaldo Gonzalez, a 6-9 and 240 pound center from Jacksonville College in Texas, made the trek to the University of Tulsa for a visit last weekend. Gonzalez averaged 10 points and 6 rebounds as a sophomore, while continually drawing double-teams. Jacksonville head coach Brandon Curran says Gonzalez is very high on the Hurricane, who have extended a scholarship offer.

“He really liked Tulsa and is considering them heavily,” Curran explained. “He was scheduled to take five visits, but now, he may only take one or two more.” New Mexico State, College of Charleston, Nebraska and South Alabama are the other schools on Gonzalez’s list.

Originally from Caracas, Venezuela, Gonzalez came to Jacksonville as a thin, unknown player. “He came here at 215 pounds and put on weight in the weight room,” Curran described. “He has a tremendous work ethic and has worked very hard to develop his offensive game. He is a good defender and he is athletic.”

Gonzalez is also an unselfish player that played on a guard-oriented team, averaging just seven shots per contest. “The guards dominated the ball and shot it really well,” Curran said. “(Gonzalez) drew a lot of double-teams, and he kicked it out a lot. When you are 6-foot-9 and 240 (pounds) in this league, you draw a lot of attention. But he can jump hook right at the basket when he gets someone sealed.”

Coach Curran explained that Gonzalez plays with intensity and is very vocal on and off the court. “He’s one of the most vocal guys on the team. He calls screens, he’s waving towels on the bench, and he gets excited sometimes when he blocks shots.”

Tulsa has been hitting the junior college scene very hard, looking for an inside presence to sure up their front line. TU can offer immediate playing time and a likely starting position, as they lose their top three front court players. Gonzalez’s size and ability would be a quality pick-up for the Golden Hurricane.

Reuters, 04.01.03, 12:25 PM ET By Susan Schneider NEW YORK, April 1 (Reuters) - Brazil's sovereign bonds swooped higher on Tuesday, building on a heady 20 percent return carved out in the first quarter, as the new government's promised reforms of the pension and tax systems lured investors searching for high-yielding assets. Brazil's share of J.P. Morgan's Emerging Market Bond Index Plus jumped 1.39 percent on the day, underpinned by a 1.5 point gain in the benchmark C bond <BRAZILC=RR> to 80.5 bid. Brazil's spreads over comparable U.S. Treasuries -- the premium investors demand to compensate for risk -- narrowed 40 basis points to 1,008, or 10.08 percentage points. Investors have poured a steady stream of funds into Brazilian bonds in recent weeks on optimism that President Luiz Inacio Lula da Silva can patch together Congressional approval for the key reforms, which are seen as crucial if Latin America's largest economy wants to improve its fiscal health. "At this point, Brazil is one of the few places where investors can find high yield in fixed income," said Ricardo Amorim, head of Latin American research at research firm IDEAGlobal. " A continued rally "will basically depend on how well the reforms go. If Lula is able to approve the social security reform in coming months, I would expect to see the EMBI-Plus for Brazil going below 700 (basis points)," said Amorim. Lula once struck fear in the hearts of investors because of his political inexperience and his talk of debt renegotiation in previous political campaigns. The Lula angst helped Brazilian bond spreads balloon to a massive 24 percent over U.S. Treasuries last year. The union boss-turned-president, who took office at the turn of the year, has since won over Wall Street with respected cabinet appointments, promises to keep a tight lid on spending and the reform pledges. Lula said last week he would send Congress the social security and tax overhauls this month. Brazil's bonds have also benefited from the momentum of last week's Inter-American Development Bank meeting of investors and officials in Milan, said traders. "People are coming back from the conference bulled up on optimism over Brazil," said an emerging debt trader. Brazil's neighbors also made rosy showings on Tuesday. Venezuela's share of the EMBI-Plus increased 1.48 percent on the day, while Ecuador added 1.45 percent. Oil prices, sizzling on concerns the U.S.-led invasion of Iraq will cause crude supply disruptions, have aided the bonds of both oil-producing nations, said analysts. The broader index, meanwhile, added 0.65 percent in terms of daily returns. POWELL VISIT PULLS TURKEY HIGHER Turkish bonds also hovered in positive territory after U.S. Secretary of State Colin Powell said late Monday he would visit Turkey on Wednesday, a trip that buoyed hopes the two nations can improve their strained relations. A U.S. official requesting anonymity called it a "kiss and make up" visit. Turkey's share of the EMBI-Plus added 0.54 percent on the day, with the benchmark 2030 dollar bond <TRGLB30=RR> adding 1 point to 88.875 percent of face value. Turkish-U.S. relations hit a rough patch after Turkey refused to allow Iraq-bound U.S. ground troops to use its territory. The move killed a U.S. offer of some $30 billion in aid and loans to Turkey, which needs the cash to shield its fragile economy from the financial fallout of the Iraq war. The fears about U.S.-Turkish relations and worries about the fate of the economy without U.S. aid helped shave 10.6 percent off the value of Turkey's bonds in the first quarter, according to the EMBI-Plus. (Additional reporting by Alexander Manda in London) (Reporting by Susan Schneider, Reuters Messaging: susan.schneider.reuters.com@reuters.net, tel: +1 646 223 6319)

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If Anything, Says Abdullah Bin Hamad Al Attiyah, The Producing Nations' Biggest Fear Is A Post-war Price Collapse In the run-up to the war in Iraq, crude oil prices shot to levels not seen since the last Persian Gulf crisis. Since the war began, however, prices have dropped back to earth. Crude oil at the New York Mercantile Exchange is hovering close to $30 a barrel, a far cry from the nearly $40-a-barrel levels seen a few weeks ago. Indeed, according to Geneva-based energy consultancy Petrologistics, the cartel boosted production by 1.3 million barrels a day in March.

Still, with the war's course so uncertain, oil prices are likely to see volatile times in the days and weeks to come. What lies ahead? On Mar. 27, Abdullah bin Hamad Al Attiyah, the president of OPEC and Qatar's Energy Minister, spoke to BusinessWeek's Laura Cohn in Doha, Qatar, about the adequacy of energy supplies, the mood at OPEC, and what will happen to oil prices after the war. Following are edited excerpts of their conversation:

Q: What are you doing to ensure that there will be adequate energy supplies? A: More oil has been produced and brought to the market. That's why the price has dropped dramatically. If you ask yourself, why has the price dropped very dramatically -- almost more than $7 in 10 days? There's more oil in the market, and the world can absorb it. Also, don't forget Venezuela is coming back [into the market as a producer].

If you go back to December [with strikes and unrest in Venezuela], we saw 3 million barrels suddenly disappear...[but it's] coming back. Now, people are concerned about Nigeria, but this is only temporary.

Q: Iraq has asked other Arab nations not to increase their production. What's your reaction to that? A: They had the right to ask. Iraq is a member of OPEC, and anyone as a member of OPEC has the right to discuss [anything] with other members. But OPEC and major oil producers are working together to stabilize the oil markets.

We are not aiming to produce just to produce. We aim to stabilize the oil market. We aim to seek a balance between demand and supply. OPEC is an international organization. It is not a political organization.

Q: How often are you in consultation with your OPEC colleagues? A: Not daily, but we are in consultation all the time. I do a lot of consultation with my OPEC colleagues, with non-OPEC colleagues. We try to see how to manage it. In reality, oil prices are always underestimated.

From 1985-2000, the average price of a barrel of oil was only $18. Sometimes it's exaggerated. When oil prices go to $30, consumers start crying. But when you take the average of the last 15 years, [you see] you shouldn't blame oil producers.

Q: Do you have any plans for an emergency OPEC meeting? A: Why should we meet? There is no shortage of oil. The price has dropped. So it's not [like] we have an agenda that would attract us to meet. If we have something to push us, yes. If there's a big shortage of oil, prices skyrocket, then we [will] have something to say.

My main concern is that after the war, we will see the oil price collapse. Demand and economic growth now are not good. The world is in recession, and this is reflected in consumption. This is a story we have to be very careful about.

Q: If the war drags on, won't oil prices rise again? A: I cannot predict what will happen. Some analysts said once the war starts, oil will reach $100. Do not believe analysts. When I went to America for school in 1970, there was a very famous song [by The Undisputed Truth] that said "Smiling faces sometimes they don't tell the truth." Analysts never give the truth. All scenarios are open. This is my concern.

Q: In your view, why did the price of oil go up so much before the war started? A: It was because of the speculators. They hijacked the oil market. We always said there's a high war premium. It was more than $7. Now the market has become more pragmatic.

Reuters, 04.01.03, 10:54 AM ET CARACAS, Venezuela, April 1 (Reuters) - Venezuela's annualized inflation rose to 34.1 percent in March compared with 17.6 percent a year before, as the oil-rich economy struggled with recession and the aftershocks of a crippling two-month strike, the Central Bank reported on Tuesday. Inflation was 0.8 percent in March compared with 4.2 percent in March 2002. Accumulated inflation to March was 9.4 percent compared with 7 percent a year earlier. Venezuela's inflation closed 2002 at 31.2 percent, the highest level in five years and more than double the 12.3 percent recorded in 2001. Venezuela, the world's No. 5 oil exporter, is struggling with political and economic crisis after the opposition strike aimed at ousting leftist President Hugo Chavez disrupted its vital petroleum output.