CORRECTED - UPDATE 5-Oil falls as U.N. calls for more time in Iraq
www.forbes.com Reuters, 01.27.03, 1:50 PM ET
In our LONDON story "Oil falls as U.N. calls for more time in Iraq" para 14 should read ...President George W. Bush's State of the Union address on Tuesday, starting at 2100 EST (0200 GMT Wednesday)... instead of ...starting at 2100 GMT (1600 local)... (correcting time) A corrected version follows
(adds Venezuela para 2, 19-21) By Richard Mably
LONDON, Jan 27 (Reuters) - Oil prices fell on Monday as United Nations Secretary-General Kofi Annan called for more time for weapons inspectors to search Iraq before the United States makes a final decision on going to war.
Signs that the Venezuelan government of President Hugo Chavez is wearing down an eight-week old nationwide strike that has slashed oil exports also helped undermine prices.
U.S. light crude
Chief U.N. weapons inspector Hans Blix delivered his first full report to the U.N. Security Council on Iraq's cooperation with arms inspectors.
He said: "Iraq appears not to have come to genuine acceptance, not even today, of the disarmament that was demanded of it."
Annan said arms experts should be given a "reasonable amount of time."
"If they need time, they should be given the time to do their work," he told reporters at U.N. headquarters in New York.
European and Middle Eastern allies are pushing the United States to allow the inspectors more time, possibly until March 1, officials and former policy makers told Reuters at the World Economic Forum in Davos, Switzerland.
"What's driving the timetable for war is not diplomacy but military readiness," said Roger Diwan of consultancy PFC Energy in Washington.
"If the U.S. needs more time to get the military in place it will use that time to seek diplomatic backing but, whether it gets that or not, we still expect war to start some time between the middle of February and early March."
Blix said that documents Iraq submitted in a 12,000-page declaration had not answered questions on the whereabouts of the deadly VX nerve gas, two tons of nutrients or growth media for biological agents, such as anthrax, and 550 artillery shells filled with mustard gas and 6,500 chemical bombs.
And despite assurances from Iraq that it would encourage its scientists to submit to private interviews, he said no such talks have taken place and Baghdad had blocked the use of U-2 surveillance flights over all parts of Iraq.
At the same time the inspectors had not found evidence of banned activity or production facilities at any of the sites investigated that the United States says exist.
STATE OF THE UNION Attention now will turn to U.S. President George W. Bush's State of the Union address on Tuesday, starting at 2100 EST (0200 GMT Wednesday). Bush is due to meet key ally Britain's Prime Minister Tony Blair on Friday. Britain has sent thousands of troops to join a U.S. military build-up in the Gulf.
The world's biggest oil exporter Saudi Arabia said at the weekend that it and fellow OPEC members were pumping sufficient volumes to prevent shortages.
"There is no shortage in the market and there should be no reason for prices where they are today," Saudi Oil Minister Ali al-Naimi told a panel at Davos at the weekend.
"We checked. We called. I checked with individual customers, refineries and others. I ask them one question: Do you feel you need more oil? And the answer is no," he said.
OPEC agreed two weeks ago to raise output by 1.5 million barrels per day to counter some of the shortfall caused by the Venezuela strike.
The Venezuelan opposition on Monday debated scaling back action to ease the burden on a struggling private sector now also threatened by government currency curbs and price controls.
Two months into the grueling stoppage, there was no sign that rebel oil workers -- the backbone of the strike protest -- would end their disruption to crude oil production and shipments from the world's fifth largest petroleum exporter.
But the debate underscored the opposition's struggle to maintain momentum for their strike and left a question mark over the fate of thousands of striking workers at the state oil firm PDVSA, who may be left more isolated in their fight to oust the populist Chavez.
Venezuelan crude output has recovered from the lows of December and strikers said on Monday production was about 966,000 bpd, 29 percent of pre-strike levels. Chavez claims production has reached 1.32 million bpd.