Opec vow to cover shortfall

www.gulf-daily-news.com Sunday-23 February 2003

ABU DHABI: UAE Oil Minister Obaid bin Saif Al Nasseri said yesterday that Opec would act to cover any break in Iraqi supplies if war erupts, but said it was too early to say whether the cartel would suspend its output quotas.

The Organisation of Petroleum Exporting Countries has repeatedly sought to assure jittery oil markets that it stands ready to fill any shortage resulting from an interruption of Iraq's two million barrels per day (bpd) of exports.

"If something drastic happens, then we have to discuss that event and take necessary action," Nasseri told reporters after meeting his Russian counterpart Igor Yusufov in Abu Dhabi. "The producers will carry out their responsibility."

Opec, due to hold a policy meeting on March 11, has raised output limits twice this year to cover for an unexpected strike in Venezuela, with most members - except Saudi Arabia and the UAE - now pushed to full capacity.

A Gulf source said earlier this week that Saudi Arabia would support a temporary suspension of quotas if an attack on Iraq halted supplies from the world's eighth largest exporter.

Opec Secretary-General Alvaro Silva said on Friday that a suspension of the quota system had yet to be discussed. UAE's Al Nasseri also said it was too early to look into this option.

On Friday, Oman and Russia, both oil-producing nations outside the Opec umbrella, called for stability on the world oil market, Oman's official ONA news agency reported.

Russian Energy Minister Igor Yusufov said the two "believe it is important to maintain stability in the oil market," after a two-day visit to Oman.

Meanwhile, Opec chief Silva said world oil reserves were currently sufficient and members will work to avoid any export disruptions to Europe.

"We will co-operate with the energy ministers of the European Union and the European Commission in order to avoid any lack in oil supply," said Silva before the start of a two-day meeting of EU energy ministers in the northern port of Thessaloniki.

Many EU leaders fear a surge in fuel costs could push sagging economies towards recession.

Crude oil prices have risen nearly 20pc since the start of the year to more than $37 a barrel.

• the highest in more than two years.

Greek Development Minister Akis Tsochadzopoulos said the goal "is to safeguard Europe from any negative implications from a war in Iraq."

"We discussed coordination on the world oil market in order to have a fair price for crude," Yusufov added.

The pair also discussed bilateral cooperation on oil and gas and investment opportunities for Russian firms in Oman.

Oman produces nearly 700,000 barrels of crude a day and has some 660 million cubic metres of natural gas reserves.

Crude oil rose in London during Friday amid heightened fears of war against Iraq, then surged sharply on news of a huge blast at a US oil and gas facility off Staten Island in New York.

The reference Brent North Sea crude oil for April delivery rose to as high as 32.35 dollars per barrel, from 31.56 dollars at the previous close.

In New York, a barrel of light sweet crude for April delivery hit a high of 35.95 dollars before settling back slightly to 35.58 dollars, but still up 84 cents from Thursday's close.