Crude shipments to reach U.S. soon - Recent surge in OPEC output should help cool oil prices, experts say
www.canada.com BRUCE STANLEY AP Saturday, March 01, 2003
A recent surge in Saudi Arabian oil production should help cool sizzling prices when crude shipments from the Persian Gulf reach U.S. ports within a month, industry analysts said yesterday.
Prices eased a day after spiking to a 12-year high in the United States on concerns about tight supplies.
Some analysts said OPEC member countries were pumping furiously and argued that the current market turmoil would ease once fresh barrels hit the market.
"A lot of the crude produced in January has not yet arrived. The situation may change drastically," said a senior source at the Organization of Petroleum Exporting Countries.
Fears of a war with Iraq are partly to blame for the latest run-up in prices.
April contracts of U.S. light sweet crude climbed as much as $2 on Thursday to peak at $39.99 a barrel in New York, the highest level since October 1990, when Iraq occupied Kuwait. Yesterday, the April contract fell 60 cents to settle at $36.60 in New York.
Concerns that a war might create supply shortages have inflated prices by at least $5 a barrel, said the source, speaking on condition of anonymity from OPEC's headquarters in Vienna, Austria.
However, analysts said OPEC could probably make up the 2 million barrels a day that Iraq would be unable to export if fighting broke out in the Gulf. OPEC supplies about a third of the world's oil.
The cartel's most powerful member, Saudi Arabia, says it can produce up to 10.5 million barrels a day.
That is substantially higher than the 8.5 million barrels a day that the International Energy Agency, a watchdog for oil-importing countries, said the country was producing in January.
"I think they're well above 10 million barrels, and pumping," said Peter Gignoux, managing director of the petroleum desk at Salomon Smith Barney.
Much of this additional crude is already on its way to the U.S. East Coast, a journey lasting about 45 days.
The United Arab Emirates and other OPEC members that aren't already producing at full capacity could boost the cartel's output further to help make up for any missing Iraqi barrels.
The recent price spike was most pronounced in the United States, the world's biggest importer of crude. While Iraq has been a factor in this surge, analysts said cold weather and the fallout from a strike in Venezuela's oil industry have played a bigger role.
"We've lived without Iraqi oil before. This doesn't bother me," Gignoux said.