OPEC prepares for war

www.heraldsun.news.com.au 03feb03

OPEC will deal with any unforeseen development such as war on Iraq, and increase supply to meet demand, the oil cartel's president, Abdullah bin Hamad al-Attiyah, said yesterday. "If there's a shortage of supply, OPEC will balance demand and supply," Mr Attiyah told reporters on the sidelines of an energy and environment conference in the Emirati capital. "We've learnt from history how to deal with these situations," he said, adding that the OPEC had "learnt a lot of lessons" from the 199O Iraqi invasion of Kuwait and the 1991 Gulf war.

He said no OPEC meeting had been scheduled during the Abu Dhabi conference attended by at least 11 oil ministers.

"Only bilateral talks are taking place but not any OPEC meetings because not all the oil ministers are present.

"The next OPEC meeting is on March 11 and we will discuss all options taking into account the market situation. For sure we will take into account any surprise development in the market also."

In the event of a US-led attack on Iraq, the cartel could convene a snap meeting, said Mr Attiyah, who is Qatar's energy and industry minister. "OPEC always has a tradition, can meet any time to discuss the markets, but I hope not to see a war," he said.

In Abu Dhabi on Saturday, Saudi oil minister Ali Al-Nuaimi renewed the kingdom's pledge to activate spare oil production capacity and make up for any loss in world petroleum supply if war broke out.

The world's top oil exporter "does not hope that a strike on Iraq happens but, if it does, it is committed to cover the needs of the market in line with its capacity", he said.

On Friday, New York's light sweet crude March-dated futures were priced at $US33.51 a barrel, well above the $US22 to $US28 per barrel OPEC price band.

In London, the price of benchmark Brent North Sea crude oil for March delivery fell to $US31.06 per barrel, despite OPEC's decision in mid-January to increase production by 1.5 million barrels a day from next month.

Industry analysts have warned that war in Iraq and continuing labour unrest in Venezuela could deprive the global oil market of about five million barrels per day.