Oil Prices Ease as OPEC Prepares for Possible War

www.voanews.com VOA News 28 Feb 2003, 23:11 UTC

World oil prices eased a bit Friday after jumping to 12-year highs of almost $40 a barrel Thursday amid worries over a possible U.S.-led war with Iraq.

U.S. light crude oil dropped to about $37 a barrel while Benchmark Brent eased to about $33.

The easing came despite market skepticism over a statement by the Organization of Petroleum Exporting Countries (OPEC) that it has enough excess supply - up to four million extra barrels a day - to cover demand in the event of war.

A petroleum expert in Vienna says if Iraq were to sabotage oil fields in Kuwait or Saudi Arabia, the extra four million barrels a day may not be enough.

And analysts for J.P. Morgan, Paul Horsnell, and other firms said they doubt Opec's has four million barrels a day in excess capacity, saying the figure is more likely just a bit over two million barrels a day.

OPEC's secretary-general says the cartel does not plan to raise production quotas for the second quarter of 2003 unless there is a war. OPEC ministers are planning to meet on March 11th at a regular session in Vienna.

Prices have also been under pressure from increased demand in the United States and shortages from a recent strike in Venezuela. Venezuela says its oil production has now reached two million barrels per day, and expects it will reach its normal output of three million barrels per day in one month.