OPEC to Draw Up Contingency Plans for Looming Iraq War

Melanie Sully Vienna 10 Mar 2003, 18:29 UTC

OPEC headquarters, ViennaMembers of the Organization of Petroleum Exporting Countries meeting Tuesday in Vienna are expected to work on contingency plans for how to respond to a war against Iraq.

The 11 members of OPEC are to consider suspending quotas and expanding production to compensate for any shortfall caused by military action against Iraq.

Saudi Arabia is already pumping above official production quotas, and says it has spare capacity if supplies are disrupted.

The United Arab Emirates said, however, that it would be difficult for OPEC to cover any oil shortage, since it is already producing at about full capacity.

The Indonesian delegation is opposed to any increase in production quotas.

Venezuela has not fully recovered from unrest that crippled its oil industry. And the loss of Iraq's crude exports would remove about two million barrels per day from the world market.

Analyst Helmut Pfeffer from the Raiffeisen Zentralbank in Vienna says that global production is already stretched.

"There are not too many countries that can deliver more than they are delivering now, neither OPEC countries nor non-OPEC countries," he said. "And one country that we've been relying on as a spare supplier is Russia. But its problem is of limited export capacity from its pipeline system. So there is not so much oil they can deliver, like pressing a button."

OPEC ministers agreed two months ago to increase production targets by 6.5 percent to 24.5 million barrels per day.

The cartel has a target price range of between $22-28 per barrel. But oil prices have soared to post-Gulf war record levels of almost $40 per barrel.