www.channelnewsasia.com First created : 12 March 2003 0853 hrs (SST) 0053 hrs (GMT) Last modified : 12 March 2003 0853 hrs (SST) 0053 hrs (GMT)

Members of the Organisation of Petroleum Exporting Countries (OPEC) have agreed to stick with their current quotas for crude oil production.

But the cartel promised to boost output in the future to keep supplies flowing in case of any serious disruption, such as might be caused by war in Iraq.Advertisement OPEC's president, Abdullah bin Hamad Al-Attiyah, confirmed that the cartel was not changing its output target of 24.5 million barrels a day and said delegates planned to meet on June 11 in Doha, Qatar, to review market conditions.

The decision was announced on Tuesday at the end of the OPEC ministers' meeting at the group's headquarters in Vienna, Austria.

They ruled out formally raising output now as a way of reassuring nervous markets before any US-led attack on Iraq.

However, they took extreme care not to mention such a conflict as a likely source of disruption, apparently afraid of seeming to support such a war simply by preparing to respond to its possible impact on markets.

Despite sharply higher oil prices, OPEC members argued that the world has enough crude to meet demand.

Since January, crude prices have skyrocketed due to fears of a war on Iraq, which has the world's second-largest proven oil reserves after Saudi Arabia, and a general strike in Venezuela, which crippled production there at the start of the year.

www.upi.com By Hil Anderson UPI Chief Energy Correspondent From the National Desk Published 3/11/2003 7:29 PM

LOS ANGELES, March 11 (UPI) -- Crude futures settled 55 cents lower on the New York Mercantile Exchange Tuesday after OPEC announced it would keep the world supplied with oil should "geopolitical tensions" deteriorate further.

While not mentioning its fellow OPEC member Iraq by name, the cartel repeated its pledge that it would be able to continue production and the flow of supplies to its customers at the conclusion of its latest conference meeting in Vienna.

"In addition, noting the uncertainties stemming from increasing geopolitical tensions and while expressing its hope that peace and tranquility will prevail, the conference reiterated OPEC's determination to ensure that the market remains stable and well-supplied," OPEC said in a statement. "The organization (has) repeatedly demonstrated its ability and willingness to continue to satisfy oil market demands in a timely fashion."

OPEC refused to withhold oil from the West in a show of support for the increasingly beleaguered Iraqi government. It also refused to increase exports from its current level of 24.5 million barrels per day to help cool off oil prices that have helped send gasoline prices in the United States to near-record levels.

The news from Vienna and reports that the Bush administration might be willing to extend the proposed March 17 deadline for Iraqi disarmament combined to cool off the bullishness on NYMEX, where April crude settled at $36.72 per barrel while May settled at $35.74. Early after-hours trading Tuesday evening saw crude as largely stable.

A chronic tightness in the U.S. crude and gasoline supply has combined to push the average price of a gallon of regular in the United States to $1.702, according to AAA, whispering distance from the May 2001 record of $1.718.

"Motorists also should resist the urge to immediately buy gas following a possible declaration of war on Iraq or the commission of a terrorist act, because 'panic buying' and long gas lines have the potential of causing needless fuel shortages," AAA spokeswoman Dawn Duffy suggested.

OPEC's statement maintained, however, that there was no physical shortage of oil on the market and the recent run-up in prices was primarily the result of oil trader worries over the Iraq situation, cold weather in the United States and the continuing labor dispute that has bogged down Venezuela's state-run oil industry.

"The current high price levels ... are predominantly a reflection of uncertainties resulting from prevailing geopolitical tensions," OPEC said. "In light of the supply-demand picture for the balance of the first quarter and the second quarter, the conference decided to maintain, for the time being, the current OPEC production ceiling. Supplies are adequate to meet current market requirements."

OPEC's ability to keep its pledge depends a good deal on whether the war spills over into Kuwait, Saudi Arabia and other Gulf nations.

The Washington Times said Tuesday that al Qaida might be forming terrorist squads to attack Kuwaiti and Saudi oilfields in the event of war.

Tina Vital, an analyst with Standard & Poor's, predicted that OPEC would increase its production in the event of war -- just in case, and warned that "if a conflict in the Middle East spills over into Kuwait, we believe OPEC may not be able to cover the shortfall, raising the prospect of additional hikes in oil prices." -0- Meanwhile, in a related energy development, the U.S. Department of the Interior added some new fuel to the debate over expanded oil drilling in Alaska on Tuesday.

Interior Secretary Gale Norton announced that an extensive survey of the caribou herds on Alaska's North Slope found that the fragile animals' numbers were on the increase, rising from 27,128 in 2000 to 31,857 as of last summer. In the 1970s, the herd was only around 5,000 animals strong.

"The fact that the herd has grown steadily for the past 25 years while energy production has been ongoing on Alaska's North Slope is a solid sign," noted Norton, whose agency has been supportive of efforts to open part of the adjacent Arctic National Wildlife Reserve to oil exploration.

"Energy production in Alaska's North Slope will reduce dependence on foreign oil from dictators and unstable countries; will create new jobs; is strongly supported by labor unions; and will protect wildlife with the toughest environmental regulations ever applied," Norton said in a statement.

new.stockwatch.com 2003-03-11 17:28 ET - News Release

NEW YORK, March 11 /PRNewswire/ -- Standard & Poor's oil and gas equity analyst has issued her latest outlook on the supply and pricing of crude oil. A leading provider of independent research, indices and ratings, Standard & Poor's made this announcement through Standard & Poor's MarketScope, its real-time market intelligence service.

"The price of April crude oil has steadied above $37 per barrel, as OPEC meets in Vienna today," says Tina Vital, Integrated Oil & Gas Equity Analyst, Standard & Poor's. "According to reports from Platts, OPEC has agreed to keep its current output quotas of 24.5 million barrels per day. However, Standard & Poor's believes OPEC will back an informal plan to produce as much oil as possible should a war disrupt Iraqi oil supplies. But with OPEC's spare capacity between 1.5 million and 3 million barrels per day, and with exports from Venezuela reduced, if a conflict in the Middle East spills over into Kuwait, we believe OPEC may not be able to cover the shortfall, raising the prospect of additional hikes in oil prices," concludes Vital.

Standard & Poor's Stock Appreciation Ranking System (STARS), which was first introduced on December 31, 1986, reflects the opinions of Standard & Poor's equity analysts on the price appreciation potential of more than 1,230 U.S. stocks for the next 6-12 month period. Rankings range from five-STARS (strong buy) to one-STARS (sell).

A model portfolio comprised of Standard & Poor's equity STARS recommendations was recently recognized by Investars.com as outperforming those of other equity research firms who analyze more than 500 stocks, over the 12-month period ending December 31, 2002.*

Standard & Poor's analytic services are performed as entirely separate activities in order to preserve the independence of each analytic process. In this regard, STARS, which are published by Standard & Poor's Equity Research Department, operates independently from, and has no access to information obtained by Standard & Poor's Credit Market Services, which may in the course of its operations obtain access to confidential information.

Standard & Poor's has the largest U.S. equity coverage count among equity research firms that are not affiliated with a Wall Street investment bank, analyzing more than 1,230 U.S. stocks. Standard & Poor's, a division of The McGraw-Hill Companies , is a leader in providing widely recognized financial data, analytical research and investment and credit opinions to the global capital markets. With 5,000 employees located in 19 countries, Standard & Poor's is an integral part of the world's financial architecture. Additional information is available at www.standardandpoors.com.

*Note to Editors: Investars.com has created a performance measurement tool called ROSS (Rate of Success System). The system quantifies the recommendations of Equity Research Firms by hypothetically purchasing shares in the recommended stock at the time of the recommendation. In short, the system calculates returns as if the Firm had actually purchased or sold shares at the time of the recommendation. Furthermore, the amount of shares purchased depends on the strength of the recommendation. For example, if a Firm's initial recommendation for the period is a buy on Cisco Systems (CSCO) then the system purchases 300,000 shares in CSCO at the price at the time of the recommendation. The price used is the opening price on the day of the recommendation. If the Equity Research Firm upgrades Cisco at a later date from a "buy" to a "strong buy" then the system increases the number of shares by 50% at the time of the upgrade. Similarly, if an Equity Research Firm downgrades a stock then the system decreases the number of shares by 33.3%. If a Firm reiterates a recommendation then the position in that stock is left unchanged. If a Firm issues a bearish rating on the stock (underperform, sell or strong sell) the system goes short the stock in the hypothetical portfolio. A short position is calculated as the inverse of a long position to reflect an analyst's market timing and to eliminate a natural mathematical bias towards long recommendations. Investars returns are excellent for relative performance of analyst rating but are not comparable to market returns or stock returns. Standard & Poor's

CONTACT: John J. Piecuch, Communications Manager, +1-212-438-1102, John_Piecuch@standardandpoors.com, or Tina Vital, Integrated Oil & Gas Equity Analyst, +1-212-438-9516, Tina_Vital@standardandpoors.com, both of Standard & Poor's

Web site: www.standardandpoors.com

www.rferl.org By Mark Baker

OPEC oil ministers, meeting yesterday in Vienna, decided for the time being not to increase output quotas -- even as prices have risen to their highest levels since the 1991 Gulf War amid concern over another war in Iraq. But the cartel signaled it would step up output in the event of a crisis to prevent an oil shortage. The question remains, however: With many OPEC members already producing at capacity, how much can the cartel do? RFE/RL correspondent Mark Baker has the story.

Prague, 12 March 2003 (RFE/RL) -- OPEC oil ministers have decided to maintain current oil output quotas -- even as the threat of war in Iraq has pushed oil prices to 12-year highs.

The cartel, which met yesterday in Vienna, announced it will hold output steady at the current 24.5 million barrels a day. OPEC's 11 members account for around one-third of world oil production.

However, in a bid to ease concern over the higher prices, Saudi Oil Minister Ali al-Naimi said his country -- OPEC's largest producer -- is prepared to increase supplies should war come, saying, "There will be no shortage of oil."

He told reporters yesterday in Vienna, "The objectives of the organization (OPEC) are to have a stable market, a fair price and a fair return on investment."

Al-Naimi's words were reinforced by Qatar's oil minister, Abdullah al-Attiyah, the current OPEC president.

"We are always, OPEC is always trying to stabilize the market, sending a strong message to our consumers," he said. "We are working very closely to the market and if there is any shortage in the market, we will interfere at the right time to balance the demand and the supply."

OPEC has come under increasing pressure to suspend its output quotas as oil prices have risen in recent days to nearly $40 a barrel. This compares to $25 a barrel one year ago.

The price rise reflects concern that a war in Iraq would badly disrupt oil supplies. Iraq's own output of around 2 million barrels a day would be expected to stop once war starts. The effect of that shortfall would be worsened if oil fields in neighboring Kuwait or other Gulf states were damaged.

One worst-case war scenario, published earlier this year by a British businessmen's group, sees oil rising to $80 a barrel.

The threat of war is not the only factor pushing prices higher. Strikes this year in Venezuela -- a major OPEC producer -- halted oil output there. The country has since renewed oil exports but at levels below its OPEC quota of 2.5 million barrels a day.

Analysts say OPEC's decision not to suspend quotas reflects deep differences among cartel members over a possible war in Iraq. Iran, for one, is opposed to any measure -- such as lowering prices -- that would lessen the economic impact of any U.S.-led attack.

Iranian Oil Minister Bijan Namdar Zanganeh said yesterday that "Iran will not back politically motivated decisions."

Analysts say leaving production quotas in place may also make sense economically. OPEC is obviously betting that any war in Iraq will be short and successful. Analysts say an OPEC decision now to increase oil production would risk seeing prices plummet after hostilities are over and war fears ease.

Demand traditionally slackens in the spring as temperatures in the Northern Hemisphere rise and the need for heating oil in Europe and North America falls. Some analysts say prices could soon drop below OPEC's informal target of between $22 and $28 a barrel.

Bill Farren-Price, the Mediterranean editor of the Cyprus-based "Middle East Economic Survey," says there's sufficient supply in the market right now.

"There's plenty of oil in the market at the moment. The oil prices are, some of the oil prices are a result of what people are calling a 'war premium' -- an expectation of shortages."

But analysts say the strategy holds risks, as well. Many OPEC members -- aside from Saudi Arabia -- are already producing at maximum capacity and do not have the ability to expand oil output if it becomes necessary.

Any significant price rise could damage fledgling economic recoveries in the United States and Europe, and in turn lessen demand for oil. Economists say even the most recent rise in the past few months has hurt energy-dependent businesses, such as airlines.

Prolonged high oil prices would also spur conservation measures in the West and catalyze development of non-oil energy sources, much as they did in the 1980s following the OPEC price hikes of the 1970s and early '80s. This is an outcome OPEC hopes to avoid.

Farren-Price says if an Iraq war carries on longer and causes more damage than expected, the International Energy Agency (IEA) could step in to authorize members to release national oil stocks. The agency did this in the first Gulf war in 1991, as price rose to more than $40 a barrel. IEA member governments are committed to taking joint measures to meet oil supply emergencies.

Farren-Price says, "If there is a conflict, and it shuts down a lot of production that OPEC is not able to deal with, then we will probably see the IEA -- the International Energy Agency -- swing into action, as they did in the first Gulf war in 1991, to authorize a release of members' stock to cope with the shortfall."

U.S. Energy Secretary Spencer Abrahams was also in Vienna to meet with some OPEC ministers. He was expected to lobby quietly for output hikes to ease price pressure.

The U.S. has said it could release some of its 600-million-barrel emergency oil reserve to dampen prices. But observers say this would only be a last resort measure, that the administration of U.S. President George W. Bush would rather any shortfall be made up by oil suppliers.

www.signonsandiego.com By Bruce Stanley 11:40 a.m., March 11, 2003 Associated Press

The members pledged to boost output in the future to keep supplies flowing in case of any serious disruption.

VIENNA, Austria – OPEC members agreed Tuesday to stick with their current quotas for crude oil production but pledged to boost output in the future to keep supplies flowing in case of any serious disruption.

Representatives of the Organization of Petroleum Exporting Countries ruled out formally raising output now as a way of reassuring nervous markets before any U.S.-led attack on Iraq.

However, they took extreme care not to mention such a conflict as a likely source of disruption, apparently afraid of seeming to support such a war by preparing to respond to its possible impact on markets.

Despite sharply higher oil prices, OPEC members argued that the world has enough crude to meet demand and blamed Middle East tensions for causing fears of a possible shortage.

"We are studying the market and keeping abreast of it," Saudi Arabian Oil Minister Ali Naimi told reporters. "There is no shortage of supply, the market is in balance, there is plenty of oil and there is a commitment to do our best within our capabilities, which we think are enough to satisfy any possible 3/8shortage in the market for whatever reason."

OPEC's president, Abdullah bin Hamad Al-Attiyah, confirmed that it was not changing its output target of 24.5 million barrels a day. Delegates planned to meet on June 11 in Doha, Qatar, to review market conditions.

OPEC officials announced their decision after meeting for two and a half hours at the group's headquarters in Vienna, Austria. OPEC pumps about a third of the world's crude.

Markets worry that a conflict with Iraq would halt that country's 2 million barrels in daily exports. The impact on supplies and prices of crude could be more severe if fighting spread beyond Iraq's borders.

"The international political tensions have, without any doubt, reduced OPEC's influence on prices," bin Hamad Al-Attiyah said in a speech to delegates at the start of their meeting.

He said OPEC must make a plan to cope with "any radical change in market conditions which may result from developments in the Middle East." This was as close as OPEC's official proclamations went to mentioning a war against Iraq, one of its founding members.

Comments by Obaid bin Saif Al-Nasseri of the United Arab Emirates on Monday suggested that the United States and other major oil-importing countries might need to rely on their own strategic petroleum reserves. The U.S. alone has a strategic petroleum reserve, or SPR, of 600 million barrels.

"OPEC is working flat out to make sure the market is supplied," said Raad Alkadiri, an analyst at The Petroleum Finance Co., a Washington consultancy.

Alkadiri agreed that the group would be hard-pressed to cover a dual shortfall from Iraq and Kuwait.

"If there are any signs of supply disruptions beyond Iraq's borders, then I think we'll see use of the SPR fairly quickly," he said.

Energy Secretary Spencer Abraham, in Vienna for an International Atomic Energy Agency meeting, appeared to confirm that view.

Asked at a news conference whether the U.S. government would release oil from its strategic reserves, Abraham told reporters: "We are prepared to act very quickly, but only if we believe a severe disruption of supply exists."

The United States and other major importing countries want OPEC to maximize its production if a war threatens supplies. Abraham planned to meet Tuesday evening with Saudi Arabia's Oil Minister Ali Naimi.

April contracts of U.S. light, sweet crude were trading at $36.80 a barrel in New York, down 47 cents from Monday's close. Brent crude futures for April delivery were 58 cents lower at $33.11 in London.