Upsurge in oil prices not too far: daily

www.irna.com Tehran, March 2, IRNA -- "If concerns over the imminent US-led military attack on Iraq are not removed, oil prices will surge over and above dlrs 50 in the not too distant future," predicted `Iran
Daily' on Sunday.
Crude prices climbed close to dlrs 40 per barrel in America on Thursday, noted the Perspective column in the English-language daily. The surge in oil price started in December after Washington started to use psychologically pressure to forcefully dispose the Baghdad regime. This, along with the conflict in Venezuela and the cold weather contributed to the hike in oil prices, it added.
It must be noted that the Organization of Petroleum Exporting Countries' benchmark price in recent months has been rising, the daily wrote.
On Thursday, it exceeded dlrs 32 and oil traders expect the prices to go beyond dlrs 40 a barrel in view of US pressure, the daily further predicted.
It recalled that the prices of crude oil reached its peak of dlrs 41.50 a barrel in 1991 and before the outbreak of the Persian Gulf War.
It must be noted that an upsurge in oil price of over dlrs 40 a barrel will bring chaos and confusion in the global oil market,
predicted the paper.
"Maintaining the prices at this level will also lead to a recession in America and other industrialized nations," it added.
Based on latest international reports, the world market is not facing a crunch and the current rise in both prices and demand is more political oriented, it said.
Thus, any developments related to the imminent US-led war on Iraq will have dire consequences on the international price of the black gold.
Worse still, if Iraqi supplies are cut as well as the supply of regional countries become problematic, it will adversely affect the global oil markets, added the paper.
Considering that a long war in the region might lead to a rise in demand in the long run, the paper believes that OPEC could compensate the shortfall. But this cannot be done unless some of the OPEC members increase the output and whether this would be possible when the shooting starts, it added.
Another possible scenario, the daily further predicted is the fact that the strategic reserves of the International Energy Agency (IEA) might be used to confront a possible oil shock.
In this connection, the remarks of the IEA Director, Claude Mandil, in London that the "reserves of the IEA members are equivalent of 115 days of total imports needs," is noteworthy, wrote the paper.
Under the circumstances, OPEC is expected to play a more active role in controlling the market and prevent the dire consequences of a new and destructive war, it suggested.
The world fully knows that America is targeting Iraq as a pretext to take hold of that country's oil as well as that of the entire region.
Political experts maintain that the oil market will undergo major changes and America will try to regulate the market based on its own economic policies, the daily believes.
But the possibility that US might succeed to this end depends on several factors and it cannot be hopeful of full success, it added.
OPEC policies based on different and effective criteria can help prevent its weaknesses, the paper believes, highlighting the need of Iranian policy-makers to chart out contingency plans to avoid shocks that could harm the country's economy in the wake of oil price fluctuations.
"All plans should heed long-term goals and based on ground realities so that the national economy is prepared as best as possible for the post-war era," concluded the daily.
FH/AR
End