www.smh.com.au March 12 2003

OPEC, which produces a third of the world's oil, is ready to expand sales in a bid to lower prices should a war with Iraq disrupt supplies from the group's third-largest member.

The Saudi oil minister, Ali al-Naimi, said markets had enough oil for now. Officials from Qatar, Algeria, Nigeria and Venezuela said the group could increase output, and that the US had no need to use its emergency reserves to lower prices.

"We will do whatever we can to avoid a shortage," OPEC President Abdullah bin Hamad al-Attiyah, who is also Qatar's oil minister, told reporters in Vienna yesterday.

Oil prices climbed to a 30-month high of $US34.55 a barrel in London yesterday, boosted partly by concerns that a US attack on Iraq may disrupt Middle East oil supplies. A three-month strike has also crippled crude oil exports from Venezuela, leaving US inventories at refineries and other businesses close to a 28-year low.

OPEC is to meet today in Vienna and has been split on suspending export quotas in the event of war.

OPEC Secretary-General Alvaro Silva said that was "not on the agenda". Iran's oil minister, Bijan Namdar Zanganeh, said OPEC "must refrain from taking any politically motivated measures" that would appear to support an invasion of Iraq.

Saudi Arabia, the world's biggest oil exporter, could produce as much as 10.5 million barrels a day within 90 days, Saudi officials say, which is about 1.7 million barrels a day more than it was producing in February.

Not all ministers, however, are optimistic about potential increases. The Organisation of Petroleum Exporting Countries was operating at "almost full" capacity, United Arab Emirates Oil Minister Obaid bin Saif al-Nasseri said.

"We all know that OPEC is doing what it can," said Jan Stuart, head of research for global energy futures at ABN Amro in New York. "In the best of cases OPEC might just be able to fill the gap. The timing is awkward because of a demand increase from US refiners just around the corner."

US refiners usually complete maintenance and begin producing gasoline for their peak summer driving season over the next few weeks, which boosts crude oil demand.

Any move by OPEC to boost production may be tempered by concern about slack demand and the possibility of a glut after any conflict in Iraq.

"OPEC is a bit split," said Lawrence Eagles, an analyst at GNI-Man Financial in Belfast. "OPEC is paranoid that raising production is going to result in a second-quarter glut," he said. "What matters is what Saudi Arabia says they are prepared to do."

www.smh.com.au March 12 2003

OPEC, which produces a third of the world's oil, is ready to expand sales in a bid to lower prices should a war with Iraq disrupt supplies from the group's third-largest member.

The Saudi oil minister, Ali al-Naimi, said markets had enough oil for now. Officials from Qatar, Algeria, Nigeria and Venezuela said the group could increase output, and that the US had no need to use its emergency reserves to lower prices.

"We will do whatever we can to avoid a shortage," OPEC President Abdullah bin Hamad al-Attiyah, who is also Qatar's oil minister, told reporters in Vienna yesterday.

Oil prices climbed to a 30-month high of $US34.55 a barrel in London yesterday, boosted partly by concerns that a US attack on Iraq may disrupt Middle East oil supplies. A three-month strike has also crippled crude oil exports from Venezuela, leaving US inventories at refineries and other businesses close to a 28-year low.

OPEC is to meet today in Vienna and has been split on suspending export quotas in the event of war.

OPEC Secretary-General Alvaro Silva said that was "not on the agenda". Iran's oil minister, Bijan Namdar Zanganeh, said OPEC "must refrain from taking any politically motivated measures" that would appear to support an invasion of Iraq.

Saudi Arabia, the world's biggest oil exporter, could produce as much as 10.5 million barrels a day within 90 days, Saudi officials say, which is about 1.7 million barrels a day more than it was producing in February.

Not all ministers, however, are optimistic about potential increases. The Organisation of Petroleum Exporting Countries was operating at "almost full" capacity, United Arab Emirates Oil Minister Obaid bin Saif al-Nasseri said.

"We all know that OPEC is doing what it can," said Jan Stuart, head of research for global energy futures at ABN Amro in New York. "In the best of cases OPEC might just be able to fill the gap. The timing is awkward because of a demand increase from US refiners just around the corner."

US refiners usually complete maintenance and begin producing gasoline for their peak summer driving season over the next few weeks, which boosts crude oil demand.

Any move by OPEC to boost production may be tempered by concern about slack demand and the possibility of a glut after any conflict in Iraq.

"OPEC is a bit split," said Lawrence Eagles, an analyst at GNI-Man Financial in Belfast. "OPEC is paranoid that raising production is going to result in a second-quarter glut," he said. "What matters is what Saudi Arabia says they are prepared to do."

Bloomberg

www.dailyherald.com Associated Press Posted March 11, 2003

VIENNA, Austria - 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 3-4 million barrels of fresh 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 favors 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 2 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 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.

Some analysts have suggested that large importing countries and OPEC - two often opposing camps - might be trying to coordinate an increase in OPEC output with a release of crude from importers' strategic reserves in an effort to head off a war-induced disruption.

Despite Al-Attiyah's claim that OPEC has "3-4 million barrels" in daily spare capacity, it was not clear how much higher the cartel could go in satisfying U.S. demands. Al-Nasseri said the United Arab Emirates' capacity of about 2.5 million barrels a day was already "about full." Aside from Saudi Arabia and perhaps Nigeria, most other OPEC members are already believed to be producing at their limits.

OPEC heavyweight Saudi Arabia, which by some estimates is pumping at a rate of 9 million barrels a day, could raise its output to 9.5 million barrels a day within a month and 10.5 million barrels a day within three months.

Yet, not all of OPEC's extra capacity is likely to be available right away. Al-Attiyah's figure for OPEC's production potential appeared to include Venezuela's nominal capacity of 2.35 million barrels a day, yet Venezuelan exports are still recovering from a crippling strike and analysts have suggested it could be months before that country resumed pumping at its earlier levels.

OPEC raised its output target by 6.5 percent in January, in an unsuccessful effort to keep a lid on rising prices. Prices for U.S. light, sweet crude have since reached a post-1991 peak of $39.99.

April contracts of U.S. crude fell 51 cents to close at $37.27 a barrel. Brent crude futures for April delivery closed 35 cents lower at $33.75 in London.

Several OPEC oil ministers attributed high prices to war hysteria and argued that there is plenty of oil to meet demand. Iran's Oil Minister Bijan Namdar Zangeneh warned Monday that OPEC shouldn't take any decision that would look appear to support a U.S. invasion of Iraq, Iran's state-run IRNA news agency reported.

www.voanews.com VOA News 11 Mar 2003, 09:10 UTC

OPEC oil ministers preparing to meet Tuesday in Vienna say there are adequate supplies of oil to sustain the market despite the looming threat of war in Iraq.

OPEC President Abdulllah bin Hamad al-Attiyah said late Monday he does not believe there is a shortage in the market. However, he added that the 11-nation cartel will do all it can to stabilize world oil markets, including raise prices if necessary, if a new Gulf war disrupts production.

Most OPEC ministers are expected to agree at today's meeting to maintain the cartel's overall output ceiling of 24.5 million barrels per day.

Crude prices have skyrocketed since January because of fears of a war in Iraq, which has the world's second-largest oil reserves, and a general strike in Venezuela that crippled production there.

World oil prices are creeping towards the all-time record of $41 a barrel reached during the 1991 Gulf war.

www.middle-east-online.com First Published 2003-03-11, Last Updated 2003-03-11 16:13:44 By Leigh Thomas - VIENNA   Al-Nuaimi sees no need to change OPEC's production quota, says high oil prices are due to war threats.

OPEC heavyweight Saudi Arabia said the organisation would do its best to stabilise oil markets rattled by threats of war in Iraq, as oil ministers prepared to meet Tuesday in Vienna.

Saudi Oil Minister Ali al-Nuaimi said global oil markets had adequate supplies and pledged the Organisation of Petroleum Exporting Countries would ensure there remained enough to cover demand.

"There is enough oil on the market and we will make sure there is enough," Nuami told reporters ahead of the meeting.

OPEC President Abdullah bin Hamad al-Attiyah of Qatar echoed that analysis.

"For the time being we don't feel there is a shortage in the market," he told reporters late Monday.

Al-Attiyah explained that after speaking with clients he understood they also felt enough oil was currently available.

OPEC ministers are expected to agree Tuesday on maintaining the cartel's overall output ceiling of 24.5 million barrels per day, rolling over a 6.5-percent increase introduced at the start of February to compensate for disruption to supplies from strike-hit Venezuela.

The Qatari minister said OPEC currently had additional capacity of "about three million" barrels per day.

But since oil markets were adequately supplied, al-Nuaimi said there was no need to change OPEC's production quota system.

"There is no reason to lift the quotas," he told reporters ahead of the meeting.

Commerzbank analyst Jon Rigby said Monday in London that sticking with the standing arrangement was the most likely outcome because "there isn't a great deal of new capacity to be introduced."

"The second thing is that the market is probably reasonably well supplied at the moment, simply because we are now moving towards the second quarter when demand typically falls for seasonal reasons," he said, referring to spring in the northern hemisphere.

Despite the OPEC assurances, oil prices climbed to a new two-and-a-half-year high in London Monday before falling prey to profit-taking.

The price of a barrel of Brent North Sea crude oil for April delivery fell 26 cents to 33.77 dollars a barrel after spiking to a two-and-a-half year high of 34.55 dollars.

New York's benchmark light sweet crude April-dated futures contract dipped 51 cents to 37.27 dollars a barrel.

Bin Hamad al-Attiyah said that the threat of war in Iraq was adding between six to seven dollars per barrel.

Al-Nuaimi said oil prices would stabilise once the threat of war was lifted.

"Eliminate the drummings of war and the price will moderate," he said.

OPEC would do its part to stabilise volatile oil markets to underpin global economic growth, he said.

Al-Nuaimi said OPEC's goal was to "make sure we have a fair price for everybody".

"And that fair price should allow reasonable world economic growth so that demand is not killed," he added.