By Brad Foss, Associated Press, 12/30/2002 18:15

NEW YORK (AP) A hint from Kuwait's oil minister that OPEC would consider increasing supplies if prices remained at current levels for much longer soothed energy traders Monday and cooled red-hot energy markets around the world.

Light, sweet crude for February delivery slumped $1.35 to settle at $31.37 a barrel on the New York Mercantile Exchange. Wholesale prices for heating oil and gasoline also fell.

In London, Brent crude futures for February delivery fell 50 cents to $29.66 per barrel on the International Petroleum Exchange.

At the retail level, though, gasoline prices remain on an upward trend as refiners pass along the high cost of crude to motorists.

The Energy Department reported Monday that the average retail price of unleaded gasoline rose 4 cents last week to $1.44 per gallon. The average price at the pump has now gone up 8 cents in the past two weeks.

While oil prices ended the day lower, they started off much higher, reaching a new two-year high of $33.65 in New York and a 15-month high of $31.02 in London.

''It is pretty much as it has been for the past month the two driving factors being Iraq and Venezuela,'' said Orrin Middleton, an oil analyst at Barclays Capital.

World oil prices have soared in recent weeks because of supply concerns stemming from the crippling of Venezuela's petroleum industry and a possible war in Iraq.

Venezuela's oil minister sought to assuage oil markets Monday by saying the country's oil production, refining and exports stymied by a monthlong nationwide strike would be back to normal by the end of January.

''By next week, production should stand at 1.2 million barrels per day and I think we can re-establish all operations within a month,'' Rafael Ramirez told reporters.

But analysts said it was the possibility of added supplies from the Organization of Petroleum Exporting Countries, not the statement from Venezuela's oil minister, that sent global energy prices lower.

''It was really the OPEC thing,'' said Ed Silliere, an analyst at Energy Merchant LLC in New York.

Heating oil futures dropped 4.05 cents to 86.74 cents per gallon in New York trading, while gasoline futures were down 5.33 cents at 87.92 cents per gallon.

Over the weekend, Kuwaiti Oil Minister Sheik Ahmed Fahd Al Ahmed Al Sabah said OPEC would consider meeting to discuss an increase in output if oil prices remain high for a prolonged period, The Times of London reported Monday.

''I can assure you that OPEC will meet if the price stays high,'' the newspaper quoted him as saying.

Under OPEC's output mechanism, an increase in production can be triggered if the price of its benchmark basket of crudes remains above the preferred range of $22-$28 a barrel for 20 consecutive days.

The basket price has been above $28 a barrel for nine consecutive trading days.

Still, concerns about Venezuela and a possible U.S.-led attack on Iraq kept pressure on the market.

Two U.S. aircraft carrier battle groups, each with about 10,000 sailors and Marines, are within striking distance of Iraq. Two others were ordered last week to prepare for departure on 96 hours' notice, as were two amphibious warfare groups.

Oil exports from Venezuela, the world's fifth-largest oil producer, have plummeted to 340,000 barrels a day from 2.3 million barrels a day due to the nationwide strike.

Ali Rodriguez, president of the Venezuelan state oil monopoly Petroleos de Venezuela SA, said Venezuela is currently producing between 600,000 and 700,000 barrels a day. Striking oil executives say it is producing less than 200,000 barrels a day.

Prudential Financial analyst Andrew Rosenfeld said in a recent report that if the strike in Venezuela ended in early January, oil production and exports would not be fully restored until early February.

Natural gas for January delivery fell 22.2 cents to settle at $4.800 per 1,000 cubic feet.

Associated Press Writer Audrey Woods in London contributed to this report.

Mon December 30, 2002 05:32 PM ET By Jude Webber

LIMA, Peru (Reuters) - A Peruvian shaman seeking to divine the future staged an elaborate ritual on Monday with potions, skulls and incantations, and came up with what many people have gathered from watching television -- war with Iraq is almost certain in 2003.

Juan Osco, dubbed the "Shaman of the Andes," led six other poncho-clad soothsayers in a New Year's ritual of invoking the gods, spitting and spraying garishly colored potions and strewing flower petals to the beats of drums and rattles on a hill overlooking Lima decked with skulls, shells and beads.

The shamans, from various parts of Peru, gathered on Sunday night to drink potions made of the hallucinogenic tropical vine ayahuasca and the cactus San Pedro -- brews which they say tap into the spiritual and allow "maestros" to see the future.

Then, in Monday's brilliant sunshine with their charms laid out on the ground and fragrant smoke filling the air, they gathered with hands outstretched to the sky to urge the gods to grant a peaceful 2003. Onlookers watched, mostly bemused.

The omens are not good. "War (in Iraq) is almost inevitable, that's what the United States wants," said the black-bearded Osco, wearing colorful poncho, a black hat and a necklace of large lizard's teeth to ward off evil.

"Saddam Hussein is strong ... He won't just want to give up. There won't be a winner. A lot of innocent lives will be lost." He added "new types of chemical weapons" would be used.

Osco, who says he is president of a 150-strong association of shamans, said he saw more fatal street protests against Venezuela's Hugo Chavez -- an opposition strike that has shut down shipments from the world's No. 5 oil exporter is now in its fourth week -- before the populist president caved in.

"Hugo Chavez is going to give in to the will of the people. He'll call early elections for May, June or July," he said.

In North Korea, Osco saw "a very delicate situation," though not yet war, after the secretive Stalinist state said it was throwing out international nuclear weapons inspectors.

As for the U.S.-led war on terror, the shamans beat and set fire to an effigy of Osama bin Laden, the Saudi-born militant whose al Qaeda network is blamed for the Sept. 11 attacks in the United States and other strikes, in a symbolic punishment.

But Osco said: "He (bin Laden) won't be captured or handed over to the United States. He's going to remain a mystery."

The shamans also cast petals over photographs of famous people -- including Brazilian soccer star Ronaldo and Zarai, Peruvian President Alejandro Toledo's newly acknowledged teen-age daughter -- to bring them good fortune in 2003.

Osco, who says there are 4,000 shamans in this Andean country where traditional spiritualism coexists with fervent Roman Catholicism, said his 2002 forecasts were 80 percent accurate, but stressed: "We're not infallible."

Posted on Mon, Dec. 30, 2002 BY NADIM LADKI AND IRWIN ARIEFF Reuters

BAGHDAD/UNITED NATIONS - Iraq, its economy in tatters, faced tougher sanctions on Tuesday after the United Nations named goods such as drugs, trucks and boats that cannot be imported without prior approval.

The 15-nation U.N. Security Council voted 13-0 to adopt the resolution expanding the list of civilian goods under sanctions. Russia and Syria abstained.

The United States and Britain cautioned Iraq against seeing this as a sign of divisions over its obligation -- under former council resolutions -- to give up weapons of mass destruction or face "serious consequences."

Iraq said the resolution would aggravate the suffering of its people, who have been under U.N. economic sanctions since Iraq invaded neighboring Kuwait in 1990.

"We confirm that the Security Council should lift the sanctions and that Iraq has met all its obligations with regard to Security Council resolutions," Iraqi envoy Mohammed S. Ali told reporters.

Additions to the U.N. sanctions list range from drugs to protect Iraqi soldiers from poison gas and anthrax to boats like those used in a deadly attack on a U.S. warship two years ago.

IRAQ CHARGES HYPOCRISY

A top adviser to Iraqi President Saddam Hussein said the United States was trying to tempt scientists to leave Iraq and entice them to giving false information with financial offers.

Iraq provided names of more than 500 scientists on Saturday, saying they were linked to its nuclear, biological, chemical and ballistic weapons programs.

U.N. inspectors began interviewing scientists over Iraq's alleged weapons programs last week but the United States wants some of the interviews to take place outside Iraq.

"This is an American plan with a clear aim. If it succeeds in tempting some of those (scientists) through promises or maybe also through threats it might get information, also false information," Amir al-Saadi, Saddam's scientific adviser, said.

The United States has declared Baghdad in material breach of a U.N. Security Council resolution passed in November which gave Iraq one last chance to disarm or face possible war.

Washington said an Iraqi declaration over its weapons of mass destruction fell short of revealing arms programs. Iraq denies it has any such programs.

Hussam Mohammad Amin, the head of the Iraqi Monitoring Directorate, told Qatar's al-Jazeera television station Iraq had not rejected the idea of taking the scientists abroad.

Asked what guarantees Iraq sought, he said: "The guarantees concern above all what the scientists will say. Perhaps something will be attributed to them which they did not state and this would be dangerous and can be used as a justification to launch an attack on Iraq."

U.N. INSPECTIONS

U.N. weapons inspectors searched at least seven suspect sites in Iraq on Monday, and the head of a missile facility accused them of acting like gangsters.

"A team of 25 inspectors stormed into the plant...in a way never seen before and in a manner similar to the work of gangs," Mohammad Hussein told reporters.

He was speaking after the inspectors counted missile engines at the Al Sumoud Company of Al Karamah Company in Abu Ghreib, 16 miles west of Baghdad.

U.N. experts, absent since December 1998, have been working flat out since resuming inspections on November 27 to check on Baghdad's assertion that it has no banned weapons.

There are now 110 inspectors from the International Atomic Energy Agency (IAEA) and the U.N. Monitoring, Verification and Inspection Commission (UNMOVIC) in Iraq.

Is there hope for unity in Venezuela, and can Hugo Chávez hold onto power? Barry C. Lynn Interviewed by Ilan Kayatsky December 30, 2002   Mother Jones: Given the recent escalation of the situation in Venezuela and the severity of the national strikes, do you think that Hugo Chávez will be able to hold onto power?

Barry C. Lynn: I think it's very hard to say whether he will be able to hold on. I think that he seems to be holding onto his support among the poor, and they are, in some ways, the people who would be hurt the worst by these strikes because they don't have pantries full of food, and they don't have money -- cash under their mattresses. And their support for Chávez has remained very strong, pretty much right at the 35 percent level, and that's according to some polls that are somewhat questionable, but they're at least holding. So, I think that that's a good sign for him, but at this point, it could go in any different direction. And there's definitely a group within the opposition that would seek a more violent outcome, and there are some people within the opposition that are getting quite desperate and that's one of the things you're seeing now. Because [Chávez] has not resigned, because he has not agreed to early elections, they're pushing a little bit harder. And that could end up creating violence. If that happens, there's no telling what will follow.

MJ: Do you imagine that the military will continue to support Chávez?

BL: Since the April coup attempt, he has definitely solidified his support within the military. He has moved out all of the people involved in that coup; even though they're not in jail, they've all been cashiered. The people who were of questionable loyalty during the coup, a lot of them have either been moved to non-central roles or pushed out. But, you never know with the military. Just the other day in the newspaper, one of the generals was talking about the financial offers that he has received to oppose Chávez; so you never know what could affect an individual or even a group with the military, but right now I think he's in a much better position with the military than he was in April.

MJ: And, in your opinion, how large is the opposition against Chávez? Is it really split down the middle, as business leaders suggest? Or is it, rather, a small and vocal minority?

BL: There are a lot of people that oppose Chávez. It would be foolhardy to deny the fact that there's a good half of the population that right now says that they want him out. They have real grievances -- they certainly think they have real grievances: the economy's lousy, he's been somewhat of an aggressive president vis-à-vis the rich and the upper-middle class, and he hasn't always offered a space in the middle for people to cooperate. But there is still a group that is pushing the much more confrontational approach -- and that's a pretty small group -- but that's the group with the most to gain, either financially or in terms of power and a new government.

MJ: Do you believe that the strikes have been engineered by the business owners and managers alone, or have the workers themselves been a part of this process?

BL: There are definitely some workers who oppose Chávez. There are also small-business owners, entrepreneurs. But, in many ways, this is more of a lock-out than it is a strike: the people that own the factories have shut the factories; the people that own the stores have shut the stores; the workers who work at the factories and work at the stores are told to stay home. [The hope among the opposition leaders] is that, for the [workers] who are poor, as their resources decrease, so will their support for Chávez.

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· Chaos and Constitution

MJ: How effective a tool has the opposition's control of media been in its battle against Chávez?

BL: I think that's been their most effective tool up until the strike. It has to be emphasized that all the major newspapers in the country are owned by opponents to Chávez; all the independent TV stations are owned by opponents to Chávez. The government has control of one television station, which is really its only link to its supporters. When you're down there, you don't see a single article in the paper, a single comment on TV that is in any way pro-Chávez, or even neutral. That has really affected the perceptions of Chávez by a huge part of the people. I think that, if a lot of the people who consider themselves anti-Chávez received more [varied] news, and if journalists were allowed to deliver a more nuanced, complex view, many anti-Chávez [Venezuelans would be less extreme in their opposition].

MJ: So, when you say in your article that Chávez has allowed freedom of speech, and that his police haven't attempted to suppress opposition, even among those who are aggressively advocating rebellion, it really seems that Chávez doesn't have the option to do otherwise, considering his lack of ability to influence how these events play out in the national media.

BL: Absolutely. He would have the option to do it, but he's restricted by two factors. One is that his government is very weak, and, until recently, he really wasn't that sure -- and maybe isn't so sure today -- whether the military would follow him into a more aggressive stance vis-à-vis the opposition. There have been a couple of times in which he's tried to arrest people (generals calling for open rebellion within the military and those who had supported the coup in April) and the neighbors of the generals came and chased away the officers who had come to arrest them. So there's real weakness, and it would be a big bet on his part if he decided to take a more aggressive stance. The other side is that he really understands -- whether this is something inherent to him or whether it's just some political calculation on his part -- he understands that right now, internationally, he will receive much more support by taking a very passive stance. He allows those to continue to have voices who, in almost any other country, would be in jail. The fact is that this really underscores that this is not by any means an authoritarian government. In almost any other country, military officers who took part in a coup in April would probably still be in jail in December. Not only aren't they in jail in Venezuela, but they're on the street, calling for a rebellion by the soldiers that used to serve under them.

MJ: Is there any way to find compromise now and reconcile the two sides?

BL: There is, but it's really up to the opposition -- or, rather, the people who follow the opposition leaders. Venezuela is a democracy. The opposition has total control over all the media. There's no problem of freedom of expression. There's no problem with their ability to express themselves. The challenge is to actually allow the people who support Chávez to express themselves. They've been locked out of the media for the most part. The opposition has control over the newspapers and television. They have a functioning legislature -- as much as legislatures function in Latin America. Within the judiciary, there are a lot of judges that are anti-Chávez and some that are pro-Chávez. There are many municipalities and state governments within Venezuela that are held by the opposition parties' politicians. There is a real vibrancy to the democracy in Venezuela, and people are able to affect the outcome of votes. They can affect the outcome of policy. What the opposition has essentially done, however, is to say that, "we don't really want to compete within the democratic battleground, we want to overthrow this government, if not through force, then simply by making them quit." And I think it's fundamentally because they understand that they're really not a majority. And they understand that in a real, one-on-one election, they would probably end up losing to Chávez.

MJ: So, you think that, even if they did succeed in getting a referendum or new elections, they might not accept a losing outcome?

BL: Yes. The key thing to understand is -- Americans think that new elections equal more democracy and that 's better. But, within democracies, if a large, vocal minority could take to the streets at any time and demand elections now, that would essentially make democracies unable to function. This would effectively prohibit any government from doing anything.

MJ: Well, it sounds as though the only way for the situation to change there, short of ousting Chávez, would be for grassroots support to be more politicized and empowered, with a stronger voice.

BL: Within the [Venezuelan] constitution, there's a provision that allows for there to be a popular referendum on the president's rule -- actually I think it's on any politician's rule -- at the half-way point. The half-way point is in August of this coming year. So, the opposition could wait until that point and organize -- I actually think they would win a referendum that asked, "Do you like Chávez or do you not like Chávez?" I think they could win that. I think they'd get lots of "no's." Then that sets the stage for having early elections. But, one of the things is that the opposition is not organized in any way. They don't have a unified message; they don't have unified leadership. The only thing that unifies them is that "Chávez must go now." And, one of the reasons that they don't want to get into this issue of real elections is that they know that they would probably fragment themselves and be unable to win.

MJ: So what is your best guess at what will happen in the next few months?

BL: At this point, my guess is that Chávez is kind of just standing there taking a bunch of punches -- I don't know if you remember Mohammed Ali's rope-a-dope. He's kind of just standing there, with his arms over his head taking these punches. And, these are pretty hard punches, but it's a matter of -- as Ali used to do -- just wearing out your opponent. They punch and punch and punch, and you stand there, and eventually they get tired, and I think that 's what he's doing. And it's starting to work, perhaps. You're seeing that the strike -- the lock-out -- is starting to fall apart. A lot of stores are starting to reopen. Restaurants are starting to reopen... The one exception is the oil industry, which is a very complicated thing.

It's very hard to run. So, on one hand, the strike is starting to fall apart, but then if the government is really unable to [resolve the oil problem], and if Caracas really starts to run out of food, then we could have a very bad situation. There could be very bad riots. But, I think that if the situation doesn't explode -- because of food shortages or if Chávez is knocked out violently -- I think that slowly the opposition will calm down and we'll move towards a pacific, democratic solution to the problem. What do you think?

30 Dec 2002 19:36

By Chris Baltimore

WASHINGTON, Dec 30 (Reuters) - A senior House Republican on Monday expressed pessimism that the Bush Administration will release crude oil from the nation's Strategic Petroleum Reserve to counter dwindling supplies from strike-ridden Venezuela, a vital U.S. supplier.

Republican Rep. Billy Tauzin of Louisiana, chairman of the House Energy and Commerce Committee, asked the Bush Administration last week to release oil from the stockpile in order to keep refineries well stocked.

"We haven't heard anything official yet. But we're not very optimistic given the administration's concerns about events in the Middle East," said Ken Johnson, Tauzin's spokesman, about the status of that request.

"We continue to be concerned that events in Venezuela will have a chilling effect on consumers in the United States," Johnson said.

Crude oil prices on Monday hit a two-year high of $33.65 per barrel as traders bet on a U.S. attack against Iraq early next year, but later fell on indications from OPEC that it will fill supply gaps caused by events in Venezuela and Iraq.

The U.S. Energy Department, which would act on Tauzin's request, has repeatedly said it has no plans to release oil from the reserve because it is not necessary.

The department was not available for comment on Monday.

The department has allowed energy firms to defer delivering 7.4 million barrel of oil to the reserve through January in order keep more crude in the U.S. market and counter a virtual cutoff in Venezuelan oil exports due to a workers strike.

The strike has closed most oil production and refinery operations in the world's fifth-biggest exporter.

Venezuelan oil workers are trying to pressure the country's president, Hugo Chavez, into early elections or to resign.

While the U.S. government has been willing to delay deliveries to the stockpile, it has refused to loan energy companies reserve oil to keep supplies steady to their refineries.

The department spokesman said there was no oil supply emergency to warrant tapping the reserve.