OPEC in pledge to avoid crisis
www.thewest.com.au VIENNA OIL production would be boosted should war with Iraq disrupt supplies and send prices rocketing even further, the Organisation of Petroleum Exporting Countries pledged yesterday. The price of oil hit $US37.78 a barrel at the weekend, sparking fears of a shortage if war was to cut off Iraq's "legal" exports of about 1.9 million barrels a day or disrupt other producers in the Persian Gulf, such as Kuwait. But the price retreated to $US37.27 a barrel yesterday when OPEC's member countries, which produce about a third of the world's oil, said they would act to head off any shortfall and could lift production by as much as three million barrels per day. "We will do whatever we can to avoid a shortage," OPEC president Abdullah bin Hamad al-Attiyah said at the cartel's Vienna headquarters, after officials from Qatar, Algeria, Nigeria and Venezuela all agreed to a production hike in the event of a war. However, not all members agreed that an increase was possible, with United Arab Emirates Oil Minister Obaid Bin Saif al-Nasseri warning that OPEC was already producing at "almost full" capacity. OPEC's production ceiling is set at 24.5 million barrels per day, although most observers believe it is actually producing around 24.7 million barrels a day. Crucially, many observers doubt Venezuela's claims that it could lift its output to 3.5 million barrels a day by mid-April despite the lingering impact of a two-month oil strike at the start of the year. Venezuela yesterday claimed it was already producing 2.65 million barrels a day, and would reach its pre-strike production level of 2.8 million barrels by the end of the month. An OPEC delegate estimated Venezuela's production at 1.5 million barrels a day. Only Saudi Arabia, the world's biggest producer, is considered able to boost output significantly. Saudi is producing about 9.3 million barrels a day, but claims to have the capacity for 10.5 million barrels daily. Many OPEC members also fear lifting production quotas could result in a massive glut of oil and plummeting prices in the second quarter should Iraqi opposition to a United States invasion prove short-lived. -REUTERS with BLOOMBER