Additional oil makes no sense

www.iribnews.com 3/15/2003 8:16:17 AM

Tehran, March 15 - Recent memories in oil markets delineates the fact that crude prices have flactuated by causes other than genuine changes in supply and demand. When the Islamic Republic, for instance, gained triumph in Iran and followed by the flare-up of an 8-year war imposed on Iran the oil prices were pushed up to 38 dollar per barrel in the year 1982. In the year 1992, oil leapt towards hikes of 40 dollars pb from an original 15 dollars after US launched assault on the oil giant Iraq. But heavy slumps at that time followed the jumps after such temporary shocks eased pressure, bringing sharp declines in revenues of oil producing countries which themselves sparked serious economic crises in those states. Mulling the facts on the ground, the giant oil producer organisation, OPEC, would take excessive care in its crude policy with a downbeat look on the market. The approach makes sense for a raft of reasons. OPEC eased taps for an additional 3.5 million barrels in supply during the recent months to see a balanced world market. Not taking the excess into account, some 3.1 million barrels of spare production go daily into market stranded. Venezuela, the third world oil supplier, has made a comeback to scales after months of tense political situation. Pundits forcast a seasonly 2 million bpd fall in demands when warm season comes. The last but not the least is that the minister in charge of the oil affairs of world's biggets consumer, the United States, has hinted lately at making use of US strategic oil reserves with an eye to conditions ongoing in the market. All in all, oil producers would feel no sagation to have any increase in supplies, if deciding to flee from effects of a future flactuated mart.