OPEC Says It Can Cover an Iraq Oil Outage

reuters.com Thu February 27, 2003 05:47 AM ET By Ellie Tzortzi

VIENNA (Reuters) - OPEC said Thursday it could cover any stoppage of Iraqi oil during war without the need for consumer countries to release emergency reserves.

"Yes, we are confident we can manage the situation given the level of production in Iraq," cartel secretary-general Alvaro Silva told reporters at a news conference at OPEC headquarters.

"OPEC has been managing the case of Iraq for more than 10 years. We will try to alleviate the situation in the normal way and meet our commitment to stabilize the market."

Silva said the producer group was already pumping beyond official output limits but could not stop speculators driving oil prices higher.

Speaking as U.S. oil prices set a post-Gulf war high of $38.66 a barrel, he said: "This is not a problem of oil in the market, it is a problem of speculation."

"We put 2.8 million barrels a day more in the market in December and January and you can see the result," he said of extra OPEC output.

Industrialized consumer nations have yet to decide whether or not they will release crude from emergency stockpiles, should the United States launch an attack against Baghdad.

OPEC is hoping it has convinced the Paris-based International Energy Agency, which controls the reserves, that a repeat of its 1991 Gulf War emergency release will not be required.

OPEC says it has the capacity to fill any shortage from Iraq, as well as compensate for shortfalls from Venezuela, where a strike is in its 12th week.

Silva said OPEC had another four million barrels a day of spare supply ready to call on, easily enough to cover Baghdad's 1.7 million bpd of exports.

But with leading OPEC member Saudi Arabia already thought pumping nine million of its available 10.5 million bpd, independent experts put spare supply in the cartel at little more than two million.

OPEC meets on March 11 and is expected to leave official supply quotas unchanged.

Delegates have said it may suspend quotas altogether during the period of any war although Silva played down that possibility.

"It is not an issue of suspending quotas. The quotas have been functioning well," he said.

"But of course in the case of catastrophe that's another question. Nobody knows the result of a war."