www.abs-cbnnews.com By NEELA BANERJEE The New York Times

VIENNA, Austria - The Organization of the Petroleum Exporting Countries (OPEC) decided at its meeting here Tuesday to maintain oil output at current levels, indicating it could do little else to cope with the uncertain impact a possible war in Iraq could have upon supplies from the Persian Gulf and global demand.

At its last meeting in January, OPEC raised production levels to 24.5 million barrels a day. But industry analysts think OPEC is producing more than that, with nearly all countries, except for Saudi Arabia, pumping at maximum capacity to calm a market shaken the last few months by export shortages from Venezuela and jitters over war.

The president of OPEC, Abdullah bin Hamad al Attiyah of Qatar, acknowledged that although the 10 voting OPEC members were taking a wait-and-see approach, the group was prepared to act quickly to produce even more oil within weeks to prevent supply shortfalls and steep jumps in prices.

"We will closely monitor market developments,” Attiyah said at a news conference after the formal meeting, “and take prompt and appropriate action as and when the need arises.”

Opec does not disclose its actual production, and Attiyah and others would say only that the group’s excess production capacity is 2 million to 4 million barrels a day above the official quota. It is unclear how much of that has already been tapped, though most industry analysts estimated that perhaps only a million barrels a day of spare capacity remained within OPEC, nearly all of it in Saudi Arabia. There is negligible spare capacity outside OPEC, analysts said.

Opec scheduled an extraordinary meeting for June 11, to be in Doha, Qatar, rather than at its Vienna headquarters. But Attiyah said that if war in Iraq touched off an emergency in oil markets before June, OPEC members would confer by telephone or convene another meeting.

Right now, OPEC's most obvious challenge is an oil price that is so high that it could cripple the economy and weaken demand. Crude oil for April delivery closed at $36.72 a barrel on the New York Mercantile Exchange, an increase of 42 percent from four months ago, when the general strike in Venezuela began and its oil exports were suspended.

Attiyah said that while OPEC was doing all it could to rein in high prices, the trend was essentially out of the group’s control. He and other oil ministers said there was enough oil on the market, but that prices were buoyed by fears of war, which added a premium to the price of oil that OPEC members have variously estimated as $5 to $8 a barrel, Attiyah said.

"The price today is being driven more by psychological forces,” he said. “I wish we had the power to freeze prices at $25 but it is out of our hands.”

Yet industry analysts explained that OPEC was now reaping a volatility in oil prices born of its aggressive cuts in output throughout 2002. “Prices are driven by fundamentals that were created over a 12-month period,” one senior oil trader who insisted on anonymity said, explaining that low commercial stocks of oil and petroleum products in the United States were a result of OPEC's export reductions last year.

"It’s very good to have a management system to bolster prices, but it can get out of hand, and it did get out of hand,” the trader said.

If prices are slipping beyond OPEC's control, the only other way to halt an upward spiral would be for Europe, Japan and the United States to release oil from their stockpiles, which together total about 1 billion barrels. But OPEC and the United States both indicated Tuesday that such a decision remained distant and would be made to address an oil shortage, not a run-up in prices.

US Energy Secretary Spencer Abraham, who was in Vienna this week to talk to officials at the International Atomic Energy Agency, met with the Saudi Oil Minister Ali al-Naimi late Tuesday and later praised OPEC for its promise to meet shortfalls in supply.

"If OPEC would cover any shortage, we would welcome that,” Bloomberg News reported him saying. “We will only draw on the Strategic Petroleum Reserve if there is a severe supply disruption.”

While prices have remained stubbornly high despite OPEC's efforts, the group fears that they could fall rapidly and far too steeply, depending upon what happens in Iraq. And OPEC must be ready for that possibility as well, its members said. If a war in Iraq is brief, there is little damage to its oil sites and only a short suspension of its exports, the nervousness in the oil markets could fade and prices could decline.

Some members worry that such a decrease could be accelerated if demand for oil falls by about two million barrels a day in the second quarter, as has historically occurred. But OPEC has little choice but to wait to react to such a trend, rather than try and head it off.

"There is no doubt that demand in the second quarter will fall,” said Chakib Khelil, Algeria’s minister of energy. “In a normal situation, we would lower supply. But this isn’t a normal situation.”

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www.forbes.com Reuters, 03.12.03, 10:14 AM ET By Jonathan Leff VIENNA, March 12 (Reuters) - The Organisation of the Petroleum Exporting Countries does not have enough spare capacity to cover a twin supply disruption from Iraq and Kuwait in the event of war, the head of Nigeria's OPEC delegation said on Wednesday. OPEC has at least two million barrels per day of available output, excluding Venezuela, where the effects of a strike have reduced output, Presidential Advisor on Energy Rilwanu Lukman told Reuters in an interview. Asked if OPEC could cover an outage of Iraqi oil, he said: "Yes, but then it would be stretching it a bit tight." If Kuwait or another Middle East producer were affected he said: "Then nobody can do anything; the SPR will come in and bring the prices down while people are putting their houses in order. This is what they did last time around. We expect them to do the same thing again if producers can't make it up." Washington has said it will use its SPR, Strategic Petroleum Reserve, as a last resort if OPEC cannot cope, under the umbrella of the 26-nation International Energy Agency. The IEA last released emergency reserves during the 1990-1991 Gulf crisis. OPEC agreed on Tuesday to leave formal output limit of 24.5 million bpd in place despite fears that a potential U.S.-led attack on Iraq could cut off its 1.7 million bpd of exports. Kuwait has said it may need to shut up to 700,000 bpd of production from fields near its northern border with Iraq, where U.S. troops are poised to invade. OPEC heavyweight Saudi Arabia has said it would pump to the extent of its capacity if needed to prevent any shortage, but even Lukman is worried that may not be enough. "Saudi has at least one million, the rest of the OPEC nine is at least another million and you have Venezuela still to go back to normal," he said. In case of war, Lukman said the cartel stood ready to "drop everything" and hold a meeting, but could also agree to raise production via telephone if required. OPEC's next scheduled meeting is June 11 in Doha, Qatar. One of several members pushing to raise its share of overall cartel output, could sustain 2.5 million bpd in the space of a few weeks, from about 2.1 million now, Lukman added. "We have the potential to increase to 2.8-2.9 million bpd, but this is not immediate," he said, adding that it could take three to six months to reach this level. The West African producer was planning 3.0 million bpd capacity by year's end, he said. The sensitive task of redistributing output quotas among members began last year and members are now debating what formula to use, although Lukman said there was no timetable for the new divisions. "The sooner the better," he said.

sg.biz.yahoo.com Wednesday March 12, 10:13 PM By Adam Smallman Of DOW JONES NEWSWIRES

VIENNA (Dow Jones)--OPEC President Abdullah bin Hamad Al Attiyah said Wednesday the group's focus is now on a cut in crude oil output because he is afraid of a collapse in prices.

"What I'm afraid of in coming months with more oil in the market...is how will OPEC manage to avoid a (price) shock," he told Dow Jones Newswires.

At their output policy meeting Tuesday, oil ministers reassured markets they will pump more oil if there's demand. But many are skeptical about how much crude the Organization of Petroleum Exporting Countries and its de-facto leader Saudi Arabia can or want to pump.

OPEC, excluding Iraq, kept their current production ceiling of 24.5 million barrels a day intact.

Looming large are a U.S.-led war against Iraq and a seasonal, second-quarter downturn in crude consumption in the Northern Hemisphere. Oil ministers will be tested BY trying to balance the two over the coming weeks.

"Now the concern is on what we'll do to cut production," Al Attiyah said.

This question was "more realistic and pragmatic" to answer than the issue of spare capacity, Al Attiyah said.

Saudi Arabia's Oil Minister Ali Naimi said Tuesday that the size of a fall in demand may not be as much as expected: "Demand may be the same. Maybe people will be building inventories. We don't know."

The International Energy Agency monthly report Wednesday stick to its second-quarter demand forecasts. It also said high oil prices, tight stock and reduced spare capacity in OPEC has left the global oil market on a knife edge, with very little flexibility to respond to further supply disruptions.

The general strike in Venezuela and fears of war in Iraq have pushed up prices and combined to reduce Organization for Economic Cooperation and Development oil stocks in January to 50 days of forward cover from 55.5 days a year ago, the Paris-based IEA said.

"A further supply disruption would tax a system operating at close to capacity," the IEA report said.

February output from all 11 OPEC members increased by 1.5 million b/d from January to 27.16 million b/d.

OPEC-10 output, excluding Iraq, was also up 1.5 million b/d on the month at 24.67 million b/d.

Output from Saudi Arabia increased 330,000 b/d to an average of 8.85 million b/d in February as the OPEC kingpin boosted supplies to cover for a shortfall in Venezuelan crude.

The IEA estimated Saudi oil output was more than 9 million b/d in the past two weeks.

Wednesday, the Kuwait News Agency reported Kuwait had begun pumping crude at full capacity of 2.4 million b/d. Kuwait's OPEC quota is 1.965 million b/d.

KUNA quoted a Kuwaiti oil official as saying the country won't close any oilfields if there's a war in Iraq.

At Tuesday's meeting, OPEC was anxious not to assume a war against one of its members is inevitable. It scheduled its next meeting three months on June 11 in Qatar, but many OPEC sources say they think they'll meet sooner.

Saudi's Naimi said OPEC must hold an emergency meeting in the event a U.S.-led war breaks out in Iraq, Arabic al-Hayat newspaper reported Wednesday. "If the war occurs, God forbid, then OPEC as a responsible organization must convene and look into the market situation," Naimi said.

The oil markets are unconvinced OPEC can or will pump significant volumes of extra oil into the market to calm prices. For that reason, markets are focused on international events and whether the U.S. and the West's energy watchdog, the IEA, will release their massive reserves.

OPEC's basket of seven crude oils averaged $32.54 a barrel Tuesday, compared with $33.11/bbl Monday.

At 1411 GMT, European benchmark April Brent crude futures on London's International Petroleum Exchange were trading down 23 cents at $33.06/bbl, while April U.S. light sweet crude trading on New York's Mercantile Exchange was down 39 cents at $36.33/bbl.

-By Adam Smallman, Dow Jones Newswires; 44-20 7842-9262; adam.smallman@dowjones.com (Selina Williams in London and Sally Jones in Vienna contributed to this article)

www.theage.com.au March 13 2003 By Neela Banerjee Vienna

The Organisation of Petroleum Exporting Countries decided at its meeting in Vienna, Austria, to maintain oil output at current levels, indicating it could do little else to cope with the uncertain impact a possible war in Iraq could have on supplies from the Persian Gulf and global demand.

At its last meeting in January, OPEC raised production levels to 24.5 million barrels a day. But industry analysts think OPEC is producing more than that, with nearly all countries, except for Saudi Arabia, pumping at maximum capacity to calm a market shaken the past few months by export shortages from Venezuela and jitters over war.

OPEC president Abdullah bin Hamad al Attiyah, of Qatar, acknowledged that although the 10 voting OPEC members were taking a wait-and-see approach, the group was prepared to act quickly to produce even more oil within weeks to prevent supply shortfalls and steep jumps in prices.

"We will closely monitor market developments," Mr Abdullah said at a news conference after the formal meeting on Tuesday, "and take prompt and appropriate action as and when the need arises."

OPEC does not disclose its actual production, and Mr Abdullah and others would say only that the group's excess production capacity is 2 million to 4 million barrels a day above the official quota. It is unclear how much of that has already been tapped, though most industry analysts estimated that perhaps only a million barrels a day of spare capacity remained within OPEC, nearly all of it in Saudi Arabia.

-New York Times

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.