OPEC tipped to make up Iraq shortfall

www.theage.com.au March 12 2003 By Neela Banerjee Vienna

Facing the prospect of war in Iraq and the continued shortfall of oil exports from Venezuela due to political unrest, the Organisation of Petroleum Exporting Countries was expected to announce at its meeting in Vienna yesterday that it would continue to supply as much oil as the markets need.

This is essentially an affirmation of what it has been doing for months, although with limited success. Most of the 10 voting OPEC members are pumping as much oil as they can, but prices have stayed high. In New York yesterday, crude oil for April delivery fell US51¢ cents, or 1.4 per cent, to $US37.27 a barrel.

But analysts in Vienna noted that prices would have been higher had OPEC not increased output, first to compensate for the loss of Venezuelan oil production and then to calm fears of a possible halt in Iraqi exports.

Recently, consumer countries, led by the United States and Europe, announced they would allow OPEC to make up for any possible shortfall in oil supplies if war broke out before they released oil from their own strategic stockpiles.

Most analysts think OPEC, at maximum capacity, could make up for the inconsistent Venezuelan production and the loss of 2 million barrels of Iraqi exports.

However Obaid bin Saif al-Nasseri, the United Arab Emirates Oil Minister, said on Monday that it would be "very difficult" for OPEC to make up for a halt in exports from Iraq and a simultaneous halt from nearby Kuwait.