OPEC Can’t Ensure Adequate Oil Supplies in Case of War: Algeria
www.riyadhdaily.com.sa Thursday - 23 January 2003
OPEC will not be able to compensate an expected shortfall of supplies of around five million barrels per day (bpd) in case of war on Iraq, Algerian Oil Minister warned in remarks published Wednesday. Chakib Khelil told the Saudi newspaper Al-Watan that only two OPEC members, Saudi Arabia and the United Arab Emirates (UAE), have a real excess production capacity. "There is a question over OPEC capability to supply the market needs because the maximum available (extra) capacity is only three million bpd ... from Saudi Arabia and UAE," Khelil said. The shortfall would occur because of a marathon strike in Venezuela and the expected complete halt of Iraqi production if the United States attacks Baghdad. The OPEC oil cartel agreed on January 12 to increase oil production by 1.5 million bpd in a bid to curb a surge in prices triggered by the strike in Venezuela and the threat of war in Iraq.
This will raise the output ceiling of the Organization ofnPetroleum Exporting Countries from 23 million bpd to 24.5 millionnbpd, with effect from February 1, 2003. Khelil said the price hike is being driven by the tense political situation rather than supply and demand mechanism. The adjusted ceiling will be reviewed at the next OPEC ordinary meeting, on March 11. Meanwhile, oil prices trickled lower in early trading on signs of progress in efforts to end a strike by Venezuela oil tanker pilots, though the spectre of a war in Iraq continued to buttress the market. The price of benchmark Brent North Sea crude oil for March delivery fell to 30.54 dollars per barrel from 30.74 dollars at the close of the previous session.
In New York, light sweet crude February-dated contracts gained 70 cents to 34.61 dollars per barrel on Tuesday, when trade was largely technical owing to the expiry of the February contract which caught some investors short, traders said. Commerzbank analyst David Thomas said prices were sliding here "on the back of the Venezuelan news and the possibility that the strike has begun to crumble." The Lloyd’s List specialist publication reported that oil tanker pilots in Lake Maracaibo, in the west of the country, were returning to work. The pilots are key to oil exports from the lake, both for docking tankers and for navigating a long, narrow channel from the lake to the Caribbean, it noted. The report, which quoted unnamed shipping agents, said the end of the pilot’s strike meant that up to five tankers could leave the channel on one tide, versus two tankers now.