Kingdom Gives Quota Suspension Green Light

www.arabnews.com Reuters

DUBAI, 20 February 2003 — OPEC member Saudi Arabia will support a temporary suspension of the group’s oil output limits if an attack on Iraq halts exports from the world’s eighth largest exporter, a Gulf source said yesterday.

But even if the Organization of the Petroleum Exporting Countries does not formally suspend its output ceiling, a senior OPEC delegate said exporters with spare capacity would “de facto” pump at will.

“In case there is a war and it seems there will be a shortage of oil to the market, OPEC will carry out its pledged policy of not allowing a shortage to take place and will supply the market with enough oil,” the Gulf source told Reuters.

“If deemed necessary in this situation, the OPEC quotas and ceiling will be temporarily suspended. Such a decision is likely to be supported by the majority, if not all OPEC members, including Saudi Arabia.”

In practice, the burden of shouldering any disruption in Iraqi export flows of some two million barrels per day (bpd) would fall on Saudi Arabia, which holds the majority of the world’s spare crude production capacity.

OPEC, due to hold a policy meeting on March 11, has raised quotas twice this year to cover for an unexpected strike in Venezuela, and most members are now pushed to full capacity.

Saudi Oil Minister Ali Al-Naimi has said Riyadh can lift pumping rates to 10 million bpd within weeks so that major consuming countries need not tap their own emergency stockpiles.

And the senior OPEC delegate said volumes will be boosted in any case to keep world oil markets from suffering a supply shock.