www.thewest.com.au VIENNA OIL production would be boosted should war with Iraq disrupt supplies and send prices rocketing even further, the Organisation of Petroleum Exporting Countries pledged yesterday. The price of oil hit $US37.78 a barrel at the weekend, sparking fears of a shortage if war was to cut off Iraq's "legal" exports of about 1.9 million barrels a day or disrupt other producers in the Persian Gulf, such as Kuwait. But the price retreated to $US37.27 a barrel yesterday when OPEC's member countries, which produce about a third of the world's oil, said they would act to head off any shortfall and could lift production by as much as three million barrels per day. "We will do whatever we can to avoid a shortage," OPEC president Abdullah bin Hamad al-Attiyah said at the cartel's Vienna headquarters, after officials from Qatar, Algeria, Nigeria and Venezuela all agreed to a production hike in the event of a war. However, not all members agreed that an increase was possible, with United Arab Emirates Oil Minister Obaid Bin Saif al-Nasseri warning that OPEC was already producing at "almost full" capacity. OPEC's production ceiling is set at 24.5 million barrels per day, although most observers believe it is actually producing around 24.7 million barrels a day. Crucially, many observers doubt Venezuela's claims that it could lift its output to 3.5 million barrels a day by mid-April despite the lingering impact of a two-month oil strike at the start of the year. Venezuela yesterday claimed it was already producing 2.65 million barrels a day, and would reach its pre-strike production level of 2.8 million barrels by the end of the month. An OPEC delegate estimated Venezuela's production at 1.5 million barrels a day. Only Saudi Arabia, the world's biggest producer, is considered able to boost output significantly. Saudi is producing about 9.3 million barrels a day, but claims to have the capacity for 10.5 million barrels daily. Many OPEC members also fear lifting production quotas could result in a massive glut of oil and plummeting prices in the second quarter should Iraqi opposition to a United States invasion prove short-lived. -REUTERS with BLOOMBER

www.theage.com.au March 12 2003 By Neela Banerjee Vienna

Facing the prospect of war in Iraq and the continued shortfall of oil exports from Venezuela due to political unrest, the Organisation of Petroleum Exporting Countries was expected to announce at its meeting in Vienna yesterday that it would continue to supply as much oil as the markets need.

This is essentially an affirmation of what it has been doing for months, although with limited success. Most of the 10 voting OPEC members are pumping as much oil as they can, but prices have stayed high. In New York yesterday, crude oil for April delivery fell US51¢ cents, or 1.4 per cent, to $US37.27 a barrel.

But analysts in Vienna noted that prices would have been higher had OPEC not increased output, first to compensate for the loss of Venezuelan oil production and then to calm fears of a possible halt in Iraqi exports.

Recently, consumer countries, led by the United States and Europe, announced they would allow OPEC to make up for any possible shortfall in oil supplies if war broke out before they released oil from their own strategic stockpiles.

Most analysts think OPEC, at maximum capacity, could make up for the inconsistent Venezuelan production and the loss of 2 million barrels of Iraqi exports.

However Obaid bin Saif al-Nasseri, the United Arab Emirates Oil Minister, said on Monday that it would be "very difficult" for OPEC to make up for a halt in exports from Iraq and a simultaneous halt from nearby Kuwait.

www.canada.com Reuters Tuesday, March 11, 2003

World oil prices dipped Monday as the United States and Britain struggled to convince wavering nations to back a United Nations resolution that would pave the way for war on Iraq.

Prices fell despite signs that the OPEC oil producer cartel, which meets today, was backing away from plans to suspend formal quotas on oil production should the United States attack Iraq.

U.S. light crude slipped 51 cents to $37.27 a barrel, below its recent peak of $39.99. Oil prices set a record high of $41.15 a barrel during the 1990-91 Gulf crisis.

London benchmark Brent for April fell 35 cents to $33.69 a barrel, below a session high of $34.55, its highest level since November 2000.

Oil prices are up 20 per cent this year on concerns that a war in Iraq could upset oil supplies from the Middle East.

A draft UN resolution proposed by the United States and Britain has set a deadline of March 17 for Iraq to satisfy all Security Council resolutions that it was co-operating fully with disarmament demands, or face war.

A vote could come as soon as today. The United States and Britain stepped up efforts to win support for the declaration, while veto-wielding members France, Russia and China are opposed to military action.

The prospect of disruption of Middle East oil supplies in the event of war is all the more serious in that it follows a strike that has crippled Venezuela's oil industry.

The Venezuelan stoppage and strong heating demand due to a severe northern winter have helped to reduce stocks in the United States, the world's biggest oil consumer, to the lowest levels since the Arab oil embargo of the mid-1970s.

OPEC powers Saudi Arabia and Kuwait had hoped to find backing at today's meeting of the Organization of the Petroleum Exporting Countries to set aside production quotas if war prevented Iraqi deliveries.

Saudi Arabia -- which holds the majority of OPEC's spare capacity -- is trying to convince the United States and other importers that OPEC can compensate for war stoppages without the need for a co-ordinated release from emergency stockpiles in consumer countries.

U.S. Energy Secretary Spencer Abraham said the United States was prepared to release crude from emergency reserves in the event of supply disruption, but a decision to release stocks would be made only in the event of a supply emergency.

Behind the scenes, Saudi Arabia has made clear that it is prepared to pump at maximum levels, with or without OPEC backing. Riyadh has lifted output sharply in recent weeks and is now pumping more than 9 million barrels daily of its 10.5-million bpd capacity.

www.bday.co.za By Daniel Rook

LONDON - Oil prices fell after France and Russia threatened to veto any UN Security Council resolution backing war with Iraq, and ministers of the Opec oil cartel pledged to ensure adequate supplies.

The price of benchmark Brent North Sea crude oil for April delivery lost 21 cents a barrel to $33.48 in early trading.

In New York, the benchmark light sweet crude April-dated futures contract shed 51 cents to $37.27 a barrel on Monday.

Prices eased back after France and Russia gave notice they would veto any UN resolution authorising war with Iraq.

The first signs of discord meanwhile surfaced between the United States and Britain over the question of testing Iraqi compliance with UN resolutions.

Analysts said that the market was beginning to doubt whether war is as imminent as had been believed.

"While a week ago everybody was saying that there was going to be military action on March 18, it now appears that Blair and Bush are failing to get support, particularly from the French and the Russians, and (March) 18 may not be the start of the conflict," said Barclays Capital analyst Orrin Middleton.

Oil ministers from members of the Organisation of Petroleum Exporting Countries (Opec) meeting in Vienna to discuss what action to take in the event of war meanwhile sought to calm nervous markets.

Opec kingpin Saudi Arabia said global oil markets had adequate supplies and pledged the 11-member cartel would ensure demand was met.

"There is enough oil on the market and we will make sure there is enough," Saudi Oil Minister Ali al-Nuaimi told reporters ahead of the Opec meeting.

Opec President Abdullah bin Hamad al-Attiyah of Qatar also said OPEC ministers “don't feel there is a shortage in the market."

The cartel was thus expected to maintain its overall output ceiling of 24.5 million barrels per day, extending a 6.5% increase introduced at the start of February to compensate for disruption to supplies from strike-hit Venezuela.

Dresdner Kleinwort Wasserstein analyst Paul Spedding said that although Opec ministers might discuss a suspension of output quotas behind closed doors, they would probably put the plan on hold and examine it again in the event of war.

He also agreed with their remarks that there is enough supply for the second quarter, when demand usually tails off as spring arrives in the northern hemisphere, though oil companies also use the period to rebuild stocks.

"I think that Saudi Arabia has probably now made up sufficiently to account for the shortfall in Venezuela," he said.

"So I think the market is now getting the amount of Opec crude it needs and for choice I would say that going through March it's probably getting more than it needs," he added.

www.canada.com Associated Press Tuesday, March 11, 2003 Associated Press

VIENNA, Austria (AP) -- OPEC will increase its oil production and possibly even suspend its current output quotas to keep the world supplied with ample supplies of crude in the event of a war with Iraq, the group's president said Monday.

Members of the Organization of Petroleum Exporting Countries can pump an additional three million to four million barrels of oil a day, and they are prepared to exhaust this spare production capacity if a war seriously disrupts exports from the Persian Gulf, said OPEC President Abdullah bin Hamad Al-Attiyah.

OPEC's secretary general and oil ministers from Iran, Algeria and Venezuela played down the possibility that the group might suspend its output ceiling, currently set at 24.5 million barrels a day. Al-Attiyah indicated he favours a greater degree of flexibility, without actually endorsing a temporary suspension.

"OPEC will do the most it can to avoid any shock in the market," he told reporters ahead of a policy meeting Tuesday at OPEC headquarters in Vienna, Austria.

OPEC, which pumps about a third of the world's crude, is already exceeding its target as members cash in on prices that have soared to 12-year highs amid fears of a war-induced supply shortage from Iraq.

A conflict would almost certainly disrupt Iraq's daily shipments of two million barrels, but at least one OPEC member -- the United Arab Emirates -- expressed doubts about the group's ability to cover a larger shortfall if fighting spreads beyond Iraq's borders.

"OPEC should not be blamed," Al-Attiyah said as he arrived at a Vienna hotel. "We will do whatever we can, but this is in accordance to our capacity. When we reach a level that we cannot exceed, then we cannot do anything."

Al-Attiyah said the market was already well supplied with crude. Saudi Arabia's oil minister Ali Naimi, speaking to reporters upon his arrival at a different hotel, agreed but gave no further details.

However, the United Arab Emirates' oil minister, Obaid bin Saif Al-Nasseri, warned it would be "very difficult" for OPEC to pump enough oil to cover a simultaneous shortfall in crude exports from Iraq and northern Kuwait.

Kuwait, which hosts most of the U.S. troops that are poised to attack Iraq, has said that in the event of war it would shut down its northern oil fields as a precaution against a possible Iraqi counterstrike. Such a step would reduce Kuwait's output by around 700,000 barrels a day, or about a third of its current production.

Al-Nasseri's comments suggested that the United States and other major oil-importing countries would need to rely on their own strategic petroleum reserves as a cushion against a serious disruption in oil supply.

The United States and other major importing countries want OPEC to maximize production if a war threatens supplies and causes prices to spike. U.S. Energy Secretary Spencer Abraham, due in Vienna Tuesday on separate business, said in London that he might meet here with oil ministers from leading OPEC producers. Al-Attiyah said Abraham had so far not requested to meet with him.