Iraq war won't stop flow of oil: OPEC
www.canada.com Chris Varcoe CanWest News Service Wednesday, March 12, 2003
VIENNA --OPEC vowed Tuesday to open up its oil taps if a war in Iraq causes serious disruptions to world energy markets, but the cartel rejected taking pre-emptive action ahead of a conflict.
The 11-members of the Organization of Petroleum Exporting Countries gathered in the Austrian capital to discuss the volatile state of the global oil market. Crude prices have soared recently to their highest point since the 1991 Gulf War and consumers are feeling the brunt of rising energy costs.
The cartel said it has the ability to significantly boost production in the event of a disruption in Iraq, but OPEC leaders insisted the market already has enough crude to go around.
"We're trying our best to avoid any shocks that the market will face," OPEC President Abdullah bin Hamad Al-Attiyah said. "We should not be blamed for high prices."
The organization has been under pressure to lift its production ceiling, now set at 24.5 million barrels per day, to quell prices that have soared roughly 50 per cent since November. Crude oil for April delivery closed down 55 cents Tuesday to $36.72 on the New York Mercantile Exchange.
The potential of a U.S.-led war in Iraq has sent ripples through energy markets, prompting concerns that country's oil production of 2.3 million barrels per day could be lost for several months. Traders are also concerned the conflict could disrupt output throughout the region, particularly Kuwait and Saudi Arabia. The Middle East supplies about one-third of the world's oil appetite of about 78 million barrels a day.
Other factors are also affecting global oil markets, including labour strife in Venezuela and cold winter weather in parts of North America that have left U.S. oil inventories at rock bottom levels.
After a whirlwind day of backroom diplomacy and formal discussions, the cartel emerged with promises of future action -- if needed -- but no additional oil.
Several oil ministers made clear, however, that the group won't sit idly by if a war in the Middle East chokes off supply and coaxes prices upward.