www.ctv.ca Canadian Press

CALGARY — With war being waged half way around the world, perhaps the first impact of the Iraq conflict for most North Americans will be when they pull into their neighbourhood gas stations.

Thursday's attack on Iraq by U.S. and British military forces could put potentially severe upward pressures on the global price of oil. And that directly affects the cost of gasoline, home heating fuel and other sources of energy.

Many factors including the length and severity of the war -- and whether Iraqi oilfields are destroyed -- will dictate how high the price of oil will eventually rise.

In recent weeks traders pushhed crude prices to nearly $40 US a barrel, mirroring levels seen during the Gulf crisis of the early 1990s. But in recent days prices dropped to the low $30s and below amid speculation the war against Iraq will end quickly, with limited disruption to Persian Gulf oil shipments.

At the beginning of the last Gulf war, oil soared to more than $40 US a barrel. Given inflation, that would equate to about $50 US today.

Using the rough calculation that each $1 US rise in the price of crude increased Canadian gasoline prices at the pump by about one cent, $50 oil could send pump prices jumping by 10-13 cents in the short term.

But Vince Lauerman, a global energy strategist with the Canadian Energy Research Institute in Calgary, cautions that the price of oil might react differently during this war.

"It was a pretty soft market going into that last war, but now the market is extremely tight in terms of stocks,'' said Lauerman.

Tight global oil supplies will indeed be a major factor.

A recent report from the U.S. Energy Department report suggested American inventories were 16 per cent lower than a year ago and nearing a 28-year low.

And even though Iraq produces only about three per cent of world supply, it is now an open question as to whether the Organization of Petroleum Exporting Countries has enough spare capacity to make up for Iraqi production, let alone other potential disruptions from neighbouring states like Kuwait.

Though non-OPEC countries like Russia and Canada have been increasing their oil production yearly, Lauerman says they generally have no spare capacity and no way to turn on the taps harder at times of need.

Suncor Energy, one of the main producers in Canada's oilsands in northern Alberta, agrees.

"We are at production capacity at over 200,000 barrels per day,'' says spokeswoman Darlene Crowell recently. "We're not like a conventional oil producer who can ramp up more wells in a heightened environment.''

Angus McPhail, an analyst at ING Financial Markets in Edinburgh, Scotland, says he believes markets would be awash in crude after a swift war, particularly if Venezuela continues to recover from an oil industry strike and other members of the Organization of Petroleum Exporting Countries keep breaking their output quotas. For the second half of the year, ING Financial Markets foresees an average Brent crude price of $18.50 US a barrel.

"We are adamant that oil prices will fall,'' McPhail said.

Chris Heggtveit, a federal Finance Department official, says there are too many variables that could come into play to determine the economic cost of the war and high oil prices.

Not only are complex Middle East geopolitical issues at play, but also other events such as Venezuela's ability to ramp up oil production again after months of internal strife that saw the world's third-largest producer at a standstill.

Still, Heggtveit says Canada should be in a better position than most countries to weather any economic storm.

"It's important to note that Canada's economy would be buffered against serious economic shocks by a number of factors.''

Firstly, Canada's in a better financial position right now than any of the G-7 group of industrialized nations.

Also, because Canada is a net exporter of oil, there will be some offsetting benefits to very high oil prices. The oilpatch will revel in extremely high profits, but federal and provincial governments will also see an bump-up in royalty payments.

As well, Canada is a member of the International Energy Agency, which is a group of 25 countries formed during the energy crisis of the 1970s.

Net oil importing countries in the IEA are required to keep oil stocks of at least 90 days supply and the group has said publicly that it is poised and ready to put additional oil on the market to control price spikes in the event of an Iraq war.

The question really becomes, how long will a spike in oil prices last?

Craig Alexander, a senior economist with the Toronto Dominion Bank, says the price of oil will fall quickly if U.S. military might becomes apparent.

"The financial markets, if they start to see signs that we are getting a very quick military campaign, will immediately start to price in lower prices for crude oil,'' he said.

And while the political ramifications of war in Iraq will likely last a long time, oil markets will likely rebound a lot quicker.

"Iraq will remain in the headlines and news long after the military conflict is over,'' said Alexander. "But those developments are unlikely to be weighing on the price of crude.''

"Once the risk of Iraq affecting its neighbour countries diminishes, and once we know for certain what happens to the Iraqi oilfields, at that point the market will begin looking beyond the conflict.''

As such, the TD Bank is expecting Canada's economic growth to be a roaring four per cent in the second half of this year.

That forecast assumes that the price of oil will be declining substantially and the geopolitical situation becomes a lot more certain than it has been in the past several months.

www.thestar.com Mar. 19, 2003. 08:12 PM

LONDON (AP) - Iraqi troops needed just a few days and some plastic explosive to destroy more than 700 wellheads and turn Kuwait's oil fields into a desert inferno. Fears are growing that President Saddam Hussein might have organized a much more meticulous sabotage of Iraq's own oil fields, in a scorched-earth tactic that could cripple Iraqi production.

The oil industry has buzzed with rumours in recent weeks that Iraqis are rigging their wells with explosives in the hope of slowing a U.S.-led attack and making the country's oil wealth worthless for any new government. A loss of oil from Iraq - home to the world's second-largest oil reserves - could crimp supplies for importing countries, including the United States, which depends on Iraq for two percent of all the crude it consumes.

Oil exports are also a major source of the money that would be needed to pay for Iraq's reconstruction after a war. Due to their strategic importance, the U.S. Defence Department said it would try to secure Iraq's oil fields quickly to prevent forces loyal to the Iraqi president from damaging them.

"We can confirm reports that (Saddam) has taken measures to booby trap oil wells by wiring the wells so that one person can blow them up," said Defence Department spokeswoman Megan Fox.

"If the worst happens and he does detonate something that causes the oil wells to catch fire, we'll do everything we can. Those assets belong to the Iraqi people, and as much as possible we'd like to keep them intact," she said.

Conventional explosives attached to wellheads and other vital facilities could halt production at any of Iraq's 1,685 wells. With more than twice as many oil wells as Kuwait, Iraq could suffer an even greater economic and environmental disaster.

When Iraqi troops retreated from Kuwait in February 1991, they attached plastic explosives to wellheads - clusters of pipes and valves protruding from underground wells - and piled sandbags against them to direct the force of the explosions for maximum effect.

The result was Dante-esque geysers of burning crude at 603 wells and serious damage at more than 100 others. Teams of firefighters from the United States, Canada and eight other countries worked from April until November of that year to douse the last flames.

Most of the teams used seawater pumped through Kuwait's empty oil pipelines to battle the fires. The heat was so intense, at more 1,093 degrees C, that water sometimes continued bubbling on the ground for two days afterward, said Canadian Mark Badick of Safety Boss, Inc.

"We've had fire helmets melt on our heads," said Badick, whose Calgary-based firm put out 180 of the Kuwaiti well fires.

Firefighters from Hungary had a different technique, using two jet engines mounted horizontally on a tank chassis - a homemade vehicle they called Big Wind - to blast flame-retardant foam.

It took Kuwait more than two years and $50 billion to restore its oil output to pre-Persian Gulf War levels. Iraq, if it sabotaged its oil fields, could take longer and cost much more.

Iraq's fields and pipelines are badly run-down after 12 years of UN economic sanctions. Its fields are also much farther from the ocean than those in Kuwait, so firefighters might be unable to pump seawater to tackle burning wells there.

Destruction could be especially bad if Iraqis set off explosives underground, deep within the well shafts themselves. If that happened, firefighters would have to drill a new "relief well" and pump a mixture of sand, gel and mud into each damaged shaft to try to plug it up and stop the blowout.

"It's a long, arduous process," Badick said. Whereas he and his crews put out as many as five fires a day in Kuwait, cleaning up after a single underground explosion can take two months.

Manouchehr Takin, an analyst at the Center for Global Energy Studies, said he doubts that Saddam would go so far as to place explosives 100 metres into well shafts.

"I'm not sure there are enough engineers and rig operators in Iraq to do this kind of work," he said.

Even if the Iraqis did booby-trap their oil fields, Takin argued Saudi Arabia, Venezuela and other OPEC member countries could ramp up their production to offset Iraq's two million barrels a day in exports.

Saudi Arabia, which has the world's largest crude reserves, has indicated repeatedly it would boost its output to keep supplies flowing. Also, the United States and other oil importing countries could tap into their four billion barrels in strategic petroleum reserves, if necessary, to cover a shortfall.

Brown & Root Services of Houston has drawn up a plan for the U.S. Defence Department for containing and assessing any damage to Iraqi oil installations. The Pentagon has invited companies to express interest in this possible work but has yet to award any contracts.

The challenge for such companies would multiply if Iraq used chemical, biological or radioactive material to sabotage its oil fields.

"That's a whole new ball game," said Peter Gignoux, head of the oil desk at Salomon Smith Barney.

Such a nightmare scenario gives pause even to well-fire veterans like Badick.

Special suits designed to protect a wearer against biological or chemical agents would disintegrate in the heat of a burning well. Firefighters might have no choice but to wait until the fires burn themselves out.

Perhaps the worst challenge would be sabotage from a radioactive "dirty bomb," Badick said.

"Would you go working around Chernobyl?" he asked, recalling the 1986 nuclear accident in Ukraine.

www.examiner.ie

THE US and Britain are on the verge of war with Iraq. The pretext for war is to prevent Iraq making “weapons of mass destruction” and to destroy any stocks of such weapons it already possesses.

However, many commentators allege that another US aim is to open Iraq's vast oil reserves for exploitation. What happens next in this crisis may determine what happens to Iraq's oil, where it goes and who makes the resulting profits.

Iraq has the second largest proven oil reserves of any nation at least 112 billion barrels, along with 220 billion barrels of probable and possible resources, and

large remaining unexplored areas. This is more than a tenth of the world's entire known oil reserve. Iraq's production costs are amongst the lowest in the world at approximately $1 per barrel, compared with $4 in the US and North Sea, and $2.5 in Saudi Arabia. Iraqi oil is also desirably low in sulphur.

Current production is low. Much of Iraq's infrastructure is wrecked and some oil reservoirs may have been damaged by over-pumping, water injection or flooding. Most pipelines and transfer facilities are also damaged. However, 417 new wells are planned. That's a lot of new business for someone. If Saddam's regime survives this crisis, these wells will be drilled by Russian, Chinese, Iraqi and Romanian companies. Some commentators suggest, for about £20bn in investment, production levels could be increased to two and a half to three billion barrels a year within five years. In the long run, the potential may be even greater, as 55 of Iraq's 70 proven fields remain undeveloped.

US Secretary of State Colin Powell has said that Iraq's oil will be held "in trust for the Iraqi people" in the event of any invasion. On who will get paid to take the oil out of the ground, and where it will go next, he has said nothing.

Although hampered by UN sanctions, Iraq has been busily signing contracts for the development of its oil resources. French and Russian companies have been particularly favoured. Major companies with deals in Iraq include TotalFinaElf, Russia's Lukoil, Zarubezneft and Mashinoimport, the China National Petroleum Company and Eni. This business would be threatened by the overthrow of Saddam's regime.

US oil companies do not hold development contracts in Iraq. Neither, with the exception of some potential small deals by Shell, do UK companies. As long ago as 1998, Chevron chief executive Kenneth Derr was enthusing about getting access to Iraq's reserves. Now, both France and Russia are worried that the Americans are talking to Iraqi dissident groups about scrapping existing contracts and providing preferential access for US companies. John Browne, the Chief Executive of BP-Amoco, recently expressed fears the US would carve up Iraqi oil resources once the war ends.

A recent Deutsche Bank report entitled Baghdad Bazaar: Big Oil in Iraq suggested a potential conflict of interest amongst the permanent members of the United Nations Security Council over the commercial implications of war in Iraq. A regime change in Iraq would benefit US and UK oil companies while a peaceful resolution would benefit oil companies based in Russia, France and China.

These issues are vital to US national interests, because the US economy remains an oil junkie in bad need of a fix. Industrialised countries consume almost 50 million barrels of oil each day, with the USA alone accounting for two-fifths of this.

The US Energy Information Administration forecasts world demand for oil will rise by between 37% and 90% by 2020, depending on the rate of economic growth. The US is forecast to need another two- to three-and-a-quarter billion barrels a year over the same period. US net oil imports more than doubled between 1985 and 2000 as US production fell and consumption rose. More than half the oil used in the US is now imported. By 2020, this dependence could rise to two-thirds. If the US were to get control of all or most of the product of Iraq's planned 417 new wells, total Iraqi production would be more than enough to meet the predicted increase in US consumption.

Two weeks after gaining power, President Bush asked Vice-President Dick Cheney to review US energy policy. Cheney is one of many administration officials, including the president, to have a background in the oil and gas industries. Others include National Security Adviser Condoleeza Rice and two cabinet secretaries. Not surprisingly, in May 2001, Cheney's report concluded that "energy security must be a priority of US trade and foreign policy".

The report set out a global strategy to enhance US national energy security, with detailed recommendations for almost every oil-producing region. The Middle East is forecast to supply between a half and two thirds of the world's oil by 2020. It will "remain vital to US interests" and "will be a primary focus of US international energy policy".

In 2001, Tony Blair ordered a review of energy policy. The review stated "the UK will be increasingly dependent on imported oil and gas", and "increased reliance on imports from Europe and elsewhere underlines the need to integrate our energy concerns into our foreign policy".

IN January this year, British Foreign Secretary Jack Straw outlined Britain's seven strategic priorities for foreign policy to senior staff from its embassies abroad. Bolstering "the security of British and global energy supplies" was number six on the list.

It would be simplistic to describe a new Gulf War as merely "a war about oil". There are many other domestic and international policy considerations involved, but oil and energy security is clearly a prime consideration in US foreign policy. Abject dependence on fossil fuels distorts US policy, prevents it from dealing rationally with countries from Venezuela to Saudi Arabia, and constitutes a major threat to global security and peace.

The need for the world in general and the US in particular to cut dependence on fossil fuels has never been greater. Not the least of the political errors of President Bush has been to review energy policy, and then, like an SUV driver with his eyes closed, put the pedal to the metal and head resolutely in completely the wrong direction. The consequences may be seen in a new war in the Gulf, and in the international conflict and turmoil that would surely follow.

news.ft.com By Alan Beattie in Washington Published: March 19 2003 22:18 | Last Updated: March 19 2003 22:18

From the point of view of the global economy, the timing of the Iraq war could scarcely be worse.

Depending on who you believe, looming war has either put on pause a recovery that was gaining pace, or fast-forwarded the process towards the second dip of global economic downturn.

But both optimists and pessimists concur that a war which increases uncertainty about the future, makes accurate assessments of current growth all but impossible, and pushes up oil prices, is the last thing the economy needs.

War will intensify the battles between optimists and pessimists. Keith Wade, chief economist at Schroders investment bank, says: "The crucial questions are: to what extent is the current weakness genuinely due to the effect of war fear; will uncertainty disappear along with Saddam; and what will be the cost?"

The US will remain the key both during and after conflict. Even without the effect of war, the eurozone, stymied by the fiscal confines of the stability and growth pact and more vulnerable than it thought to financial market weakness, has failed to take up the slack left when the US went into recession in 2001.

Japan has been unable to contribute much. The attention of its economic policymakers at present is concentrated largely on damage limitation, trying to prevent stock market falls ripping a fresh hole in the already tattered balance sheets of its banks.

But while the other two large economic blocs had clear weaknesses well before the build-up to war, opinions have remained divided over the US economy's underlying condition.

Optimists, including policymakers at the Federal Reserve who left interest rates on hold this week, say the US - having sputtered erratically in 2002 - was at the point of picking up sustained speed when war talk intervened. Corporations had substantially rebuilt their balance sheets, cutting net debt after the binges of the late 1990s and leaving themselves in a better position to invest again.

Pessimists point to remaining underlying imbalances in the US, notably the very low savings ratio among consumers. War could provide the trigger for the eventuality many economists have feared and long predicted: consumers finally throwing in the towel and deciding to retrench and pay down debt before business investment takes up the slack.

"Household sector finances remain on a knife-edge," says Andrew Cates at UBS Warburg.

Policymakers, in particular the Federal Reserve, will be watching two factors as evidence that the war factor is weakening the economy.

The most immediate and obvious transmission mechanism from conflict in Iraq to the global economy is the oil price.

Economies have become efficient in energy use in the past three decades but the immediacy of oil costs in taking chunks out of households' and companies' spending power means it will demand attention.

If the war seems likely to be lengthy, and pushes oil prices back up after recent falls, central banks will not hesitate to cut interest rates to offset its effects.

But opinions are also divided as to how far oil prices will go up during the conflict and then fall back if and when the Saddam Hussein regime falls. Many economists have looked back at the first Gulf war in 1991 for clues as to how oil prices are likely to react this time.

However, exact parallels are hard to draw. One positive implication for the current situation compared with the early 1990s is that the Iraqi invasion of Kuwait in 1990 came as a shoc k, driving oil prices higher because of uncertainty as well as supply disruption.

Given the protracted build-up to war, that extra surprise effect is unlikely to happen this time. In fact, recent falls in oil prices suggest traders are looking forward to the resolu tion of uncertainty that the war would bring.

On the negative side, there are several other reasons that oil prices should be high, including political unrest that has disrupted supply in Venezuela and Nigeria and the after-effec ts of an unusually cold winter in North America. Those Fed officials hoping for a quick drop in oil prices, to the low $20s range, when the war is resolved may be disappointed.

The second, and related, factor is consumer spending, above and beyond what amounts to a tax on consumers arising from the higher oil price. Falls in consumer confidence have yet full y to be reflected in actual behaviour. But a war could finally make concrete ethereal fears that have floated around the household sector for months.

Wars are convenient excuses for economic weakness. But no one can argue that they did not see this one coming. The test of policymakers to cope with external shocks to the global econ omy is on very public display.

www.rferl.org By Charles Recknagel

The war in Iraq will take place in the heart of the world's most important oil region and will directly affect two oil-producing states: Iraq and Kuwait. That raises fears that the war could cause an immediate surge in oil prices, among other disruptions to the global oil market. In this report from Kuwait City, RFE/RL correspondent Charles Recknagel looks at the oil stakes in the coming conflict.

Kuwait City, 19 March 2003 (RFE/RL) -- With a U.S.-led attack on Iraq likely just hours away, one of the first casualties of the impending conflict has been Iraq's oil exports.

Exports under the UN-approved "oil-for-food" program all but ended two days ago as shipping insurance companies declared a moratorium on coverage for tankers visiting Iraq's Persian Gulf terminals. The UN announced its suspension of the oil-for-food program on 17 March as part of an order to evacuate all of its staff from Iraq prior to any war.

The cut-off of Iraq's legal exports -- combined with uncertainty over how long a war will last and how much the fighting may damage Iraqi oil fields -- could fuel higher oil prices as nervous traders bid for supplies to make up the shortfall. Iraq's exports under the oil-for-food program averaged 1.7 million barrels per day last month. Baghdad is also estimated to routinely smuggle some 300,000 barrels per day to Syria, Jordan, and Turkey.

Oil experts differ on how much prices may now jump. Some analysts have predicted a surge of $5 to $6 a barrel, up from this week's price of some $33. Prices at $35 to $40 a barrel would be an additional burden for industries like airlines and automakers and put further strains on the world economy, which already is suffering from a prolonged downturn.

But other analysts believe any jump could be modest. They say today's oil prices already reflect the market's worries about supplies and that the actual onset of the war -- plus prospects for a quick U.S. victory -- may now begin easing trader tension. In one sign of what might happen, oil prices dipped to their lowest level for three months yesterday after U.S. President George W. Bush gave Iraqi President Saddam Hussein 48 hours to leave the country or face invasion.

Yet oil prices are considered almost certain to jump if the war with Baghdad causes any disruption of exports from neighboring states. The most vulnerable of these is Kuwait, whose northern oil fields are close to the Iraqi border. Kuwait's southern oil fields, like the major oil fields of Saudi Arabia and Iran, are generally considered outside the zone of conflict.

Due to fears of Iraqi missile attacks, Kuwait already has closed two of its northern oil wells, losing a total of about 35,000 barrels per day. The emirate has said it will close all of its northern oil wells if necessary, even though that would reduce its national oil production by 18 percent.

Shaykh Ahmad al-Fahed al-Jaber al-Sabah, Kuwait's information minister and acting oil minister, described the emirate's policy this way to reporters earlier this week: "Kuwait will continue with its production of oil at full capacity. Now we are between 2.3 and 2.4 [million barrels per day]. We will continue with our production even if it is necessary to close our northern wells. And if we speak about [closing] those wells in the north, that means we will continue with our capacity at 1.9 million barrels per day."

The oil minister also said that Kuwait and other members of the Organization of Petroleum Exporting Countries (OPEC) will increase production to make up for any shortfalls due to war. He said the producers' goal is to keep prices at less than $35 a barrel during the crisis. "I think that with the production here and [that of] our OPEC colleagues will always be within the average of the supplies [currently] on the market, and we will make sure there will be no shortage in the market. And we even believe the prices will be stable at $35 [a barrel] and below," al-Sabah said.

Oil analysts say that OPEC members other than Iraq have about 6 million barrels per day of unused production capacity from which to make up for the loss of Iraqi or any Kuwaiti oil. Half that excess capacity is in Saudi Arabia, with most of the rest in Kuwait and the United Arab Emirates. Non-OPEC member Russia is also considered likely to increase its exports in an effort to expand its market share.

But as OPEC states reassure the market that they will dampen any price spikes, it is far from clear how the cartel will ultimately respond to the Iraq oil crisis as it continues over the next several years.

A central question is what will happen to oil prices once Iraq resumes exporting after the conflict ends. Major foreign oil companies are eager to develop Iraq's oil fields far beyond current production levels, and U.S. officials have said they count on the oil revenues to help pay for the country's reconstruction.

Yet increased production by Iraq would drive down prices unless other OPEC members cut back production to accommodate Baghdad's revenue needs. So far, OPEC has yet to give any sign of how it would solve that problem. Major drops in prices can trigger new world financial crises, such as Russia's economic setback in the late 1990s when Moscow saw its oil revenues dramatically reduced.

Abdul-Rahman al-Humood is secretary-general of the Kuwait Economic Society. He said that Iraq's oil production capacity today is some 3 million barrels per day. Baghdad's actual output has varied widely but has rarely topped 2.5 million barrels per day due to lack of equipment and spare parts during 12 years of economic sanctions. Such output compares with some 3.5 million barrels per day in 1979, before Iraq's 1980-88 war with Iran and the 1991 Gulf War.

Al-Humood estimates that Iraq's production capacity could be increased to 8 million barrels per day if foreign companies fully invest in rehabilitating and expanding the country's oil fields. He said the increase could take three to five years to realize and will face the market with the tough challenge of absorbing an almost doubling of Baghdad's oil exports.

"If we are talking the maximum with new fields and new complete maintenance to the existing fields, let's say the maximum that they reach after three years is 8 million. That means an increase of 4 million. How will the market absorb this 4 million?" Al-Humood asked.

The Kuwaiti analyst said that as the global economy grows over the next five years, increased demand could absorb about half of the new Iraqi production without disrupting oil prices. But accommodating the rest could only be done through production cutbacks and financial sacrifices by other OPEC states if prices are to remain up.

Such production cuts have never been easy for the cartel, whose members depend on their oil revenues for most or, in some cases, all of their state budgets. The past four years have seen members mostly adhere to OPEC's production-quota system in order to bring prices up from a prolonged slump. But historically, cartel members have routinely exceeded their quotas in order to earn additional revenues and take market share from rival producers.

In one measure of the difficulties OPEC may have absorbing increased Iraqi production, al-Humood voiced a widespread Kuwaiti opinion that Saudi Arabia -- OPEC's largest producer -- should bear most of the burden. He said that much of Saudi Arabia's oil-export revenue goes into private hands, so the cutbacks would not as directly reduce the state budget as they might in other countries. "Saudi Arabia has produced more than 10 million BPD [barrels per day] maybe for 12 years. But this huge amount of production does not have an effect on their economy. And the reason for this is that huge amounts of money do not go to the government budget. Let's say 20 to 30 percent of this money goes out of the budget and into the hands of the rulers, the companies, the mediators -- you name it," he said.

Such suggestions are not likely to be welcome in Riyadh, where lines between the government budget and the private budgets of top members of the royal family are often blurred. Saudi Arabia currently is running a government budget deficit and has had to postpone some development projects to expand its narrow, oil-dependent economy. That means Riyadh is likely to look for other OPEC producers with which to share any cutbacks, severely testing the cartel's ability to cope with higher Iraqi oil exports.

Iraq is a major oil player because -- despite its low production in recent years -- it has the second-largest oil reserves in the world after Saudi Arabia. Iraq's official oil reserves are estimated at 112 billion barrels, about 40 percent of Saudi Arabia's and a little bigger than those of Kuwait. Any new Iraqi government is widely expected to remain within OPEC -- of which Baghdad was a founding member -- in an effort to maintain oil producers' ability to collectively influence world oil prices.

Oil prices have been climbing since last year, when they were around $21 a barrel. Upward pressures have included oil producer Venezuela's political crisis, U.S. government purchases of oil to build up domestic strategic reserves, and Washington's showdown with Iraq.

OPEC producers have said they believe an oil price of around $25 a barrel is an acceptable balance between producers' and consumers' needs, but maintaining that target has proved difficult in recent years