Saudis set to open taps

www.dailytelegraph.news.com.au 13jan03

OPEC would make sure there were no oil shortages worldwide amid a strike in Venezuela and the threat of military action in Iraq, Saudi Oil Minister Ali al-Nuaimi said at the weekend. "I support making sure the market is well balanced. There will be no shortage of supply in the market when the market is well balanced," he said upon arriving in Vienna for yesterday's meeting of the Organisation of Petroleum Exporting Countries.

He refused to give figures for what is expected to be an increase in oil production in order to bring down prices in a market pressured by a six-week strike in Venezuela and the threat of a US-led war against Iraq.

The extraordinary meeting of OPEC at its headquarters in Vienna was expected to increase its official output quota by between 1 million and 2 million barrels per day to help make up the shortfall caused by the general strike in Venezuela, a major supplier to the US.

Venezuela accounts for about 13 per cent of US oil imports. The strike there has caused US oil stocks to fall at a time when Washington needs them to increase as it prepares for a possible war on Iraq.

If the US launches a war in Iraq before the Venezuelan strike ends, markets could be deprived of about 5 million barrels of crude oil per day, or even more if the war were to destabilise other Middle East producers.

But the size of the increase remains hard to predict, due to both the Venezuelan factor and the even greater potential for market destablisation that a possible US-led war in Iraq presents.