afr.com Jan 16 09:38 AFP

Oil prices gushed higher overnight as US petroleum stocks shrank and fears mounted about the impact of a possible war in Iraq and the general strike in Venezuela.

"People are still taking in what's going on with Iraq and Venezuela," said Mike Fitzpatrick, market analyst at Fimat.

Prices had been supported by news that US commercial crude stocks had dropped last week, he said.

New York's reference light sweet crude February-dated futures surged US84¢ to $US33.21 a barrel.

In London, the price of benchmark Brent North Sea crude oil for February delivery leapt US61¢ to $US31.22 a barrel.

Commentators said concern over mounting tensions between the United States and Iraq, coupled with worries over Venezuelan supply disruptions, continued to drive prices.

"It's still the same issues - the Venezuelan strike and the impending threat of war against Iraq - which the market is really focusing on," said Prudential Bache oil broker Tony Machacek in London.

US President George Bush expressed mounting impatience with Baghdad on Tuesday, warning that "time is running out" for Iraqi leader Saddam Hussein to avert war by heeding a UN disarmament ultimatum. advertisement advertisement

GNI analyst Lawrence Eagles, also in London, said that although Mr Bush said little that was new, his comments had nonetheless served to "underscore the US message and the potential for unilateral action despite European pressure for diplomacy".

In a separate development, the United States earlier on Wednesday formally asked the North Atlantic Treaty Organisation for support in the event of a war against Iraq.

Supply disruptions, stemming from the ongoing general strike in Venezuela, have hit US stock levels in recent weeks, although not as badly as many had feared.

US commercial crude oil stocks - excluding the emergency reserve - fell last week as the Venezuelan strike pressured supplies.

The Energy Department said US commercial crude oil inventories dropped by 6.4 million barrels to 272.3 million barrels in the week to January 10 when compared with the previous week.

Crude oil imports rose 200,000 barrels a day from the previous week to an average 8.5 million barrels a day last week, it said.

Daily imports averaged 8.4 million barrels over the past four weeks, down about 400,000 barrels from the same period a year earlier.

"It appears that while crude oil imports from Venezuela continue to be much lower than normal, they have increased some over the last two weeks," the department said.

seattlepi.nwsource.com Wednesday, January 15, 2003 · Last updated 2:03 p.m. PT By MASOOD FARIVAR DOW JONES NEWSWIRES     Iraqi President Saddam Hussein, right, receives unidentified Jordanian tribal leaders in Baghdad, Wednesday, Jan. 15, 2003. (AP Photo/INA)

NEW YORK -- Under sanctions and an erratic leader, Iraq has hardly been a reliable global oil supplier.

But in an odd twist, the United States has grown increasingly reliant on Iraqi oil exports to replace supplies cut off by a seven-week-old strike in Venezuela - even as the Bush Administration steps up preparations for a possible invasion - raising further concerns about the impact a U.S. attack would have on the oil market.

"The United States gets several hundred thousand barrels a day of crude oil from Iraq," said John Lichtblau, chairman of PIRA Energy in New York. "That's not insignificant."

Unpublished, preliminary government data indicate exports of Iraqi oil to the United States have been rising in recent weeks. Since the Dec. 2 start of the labor strike in Venezuela, Iraq's crude oil exports to the United States have averaged more than 500,000 barrels a day, nearly double the volume reported during the September-November period, the data show.

Last week, Iraqi oil exports to the United States jumped to 830,000 barrels a day, their highest level since early last year and nearly 10 percent of total U.S. imports that week, according to an Energy Department analyst.

While Iraq's exports remain below levels seen in 2001 and early 2002, the recent surge, including the shipments to the United States, is making a difference, analysts said.

The surge in Iraqi shipments helped boost total crude oil imports into the United States by 200,000 barrels a day last week to 8.5 million barrels a day.

"That's probably in reaction to the loss of Venezuelan exports," said Aaron Brady, an analyst at Energy Security Analysis Inc., a consulting firm in Wakefield, Mass. "You need to make it up somehow. Iraqi oil is doing its share filing in that gap."

Iraqi oil exports have been erratic since the start of the United Nations oil-for-food program six years ago. The program allows Iraq to sell as much oil as it likes provided revenue go into a U.N. account and are used mostly for humanitarian purposes.

After topping 1 million barrels a day in January and February of last year, Iraqi oil exports to the United States nose-dived. The decline came in response to the onerous conditions of a new U.N. pricing policy imposed to frustrate Baghdad's efforts to collect an illegal surcharge from traders.

Iraq compounded the problem by cutting off its exports in April in an ill-fated effort to spark a broad oil embargo in support of the Palestinians.

For much of last year, Iraqi exports averaged less than 1 million barrels a day, with less than half coming to the United States.

Faced with a sharp loss of revenue and U.S. threats of military action, Iraq quietly dropped the surcharge demand in September. Some analysts saw the move as an attempt to build commercial ties as a bulwark against a U.S. attack.

Whatever the motive, the change prompted major international oil companies to return to the Iraqi market for the first time in nearly two years, according to industry analysts and U.N. diplomats.

The result has been a clear rise in Iraq's oil exports, according to U.N. figures. Since the start of September, Iraqi exports have averaged about 1.5 million barrels a day, the figures show.

Iraq typically ships between 40 percent and 50 percent of its oil exports to the U.S. market. But even if more oil goes to Europe, in a global market it makes little difference, Brady said.

"It frees up other oil to be sent to the United States," Brady said. "It's helping right now."

With Iraqi oil exports rising and Venezuelan oil largely off the market, analysts are increasingly concerned about the prospect of losing both producers at the same time.

Those concerns have driven oil prices up over $33 a barrel to two-year highs in New York. Prices are now 75 percent higher than they were a year ago.

To help offset the loss of Venezuelan oil, the Organization of Petroleum Exporting Countries agreed Sunday to hike production by 1.5 million barrels a day beginning Feb. 1.

Iraq, an OPEC member, wasn't part of the agreement, because its exports are controlled by the U.N.

OPEC officials said they will hike production again if Iraqi oil supplies are disrupted by a war.

The Bush administration has so far resisted pressure to release oil from the nation's Strategic Petroleum Reserve to counter the Venezuelan supply shortfall. Observers believe the administration wants to have the option of tapping the reserve if there is a war with Iraq.

ogj.pennnet.com By OGJ editors

HOUSTON, Jan. 15 -- Crude oil futures prices rose modestly Tuesday upon comments from the United Nations chief arms inspector Hans Blix that his team found evidence of weapons-related smuggling by Iraq.

But Blix said it was unclear if the goods were linked to weapons of mass destruction. Meanwhile, US President George W. Bush issued a stern warning to Iraq that he is running out of patience.

"I'm sick and tired of games and deception," he said. "I haven't seen any evidence that he has disarmed. Time is running out on Saddam Hussein. He must disarm," Bush said of the Iraqi president.

The market already was jittery because of a huge build of US planes and ships along with thousands of troops in the oil-rich Middle East. Traders also are keeping a close eye on the general strike in Venezuela that has drastically reduced that country's oil exports.

Venezuelan President Hugo Chávez is slated to visit with UN Secretary General Kofi Annan on Thursday.

The February contract for benchmark US light, sweet crudes rose by 11¢ to $32.37/bbl Tuesday on the New York Mercantile Exchange. The March position also gained 19¢ to $31.78/bbl.

Refined products closed mixed. Unleaded gasoline for February delivery slipped by 0.74¢ to 89.16¢/gal on NYMEX. Heating oil for the same month rose by 0.78¢ to 89.16¢/gal.

The February natural gas contract lost 14.4¢ to $5.11/Mcf on NYMEX.

In London, the February contract for North Sea Brent oil gained 41¢ to $30.61/bbl on the International Petroleum Exchange. The February natural gas contract also climbed, rising 15¢ to the equivalent of $3.44/Mcf on IPE.

The average price for OPEC's basket of seven benchmark crudes climbed 39¢ to $30.21 Tuesday.

www.wsws.org By Kate Randall and Barry Grey 15 January 2003

In recent weeks popular opposition to the impending war against Iraq has grown not only internationally, but also within the US. Even polls published by the pro-war American media show a sharp drop in support for Bush’s war drive. A CBS News poll published January 7 reported that only 29 percent of Americans support unilateral US military action against Iraq, while 63 percent favor a diplomatic solution.

Nevertheless, the Bush administration continues its feverish military buildup in the Persian Gulf, with an estimated 160,000 troops now present or en route to the area. According to the same CBS poll, while a majority of Americans oppose a war, 74 percent believe it is inevitable—a feeling that owes a great deal to the prostration of the Democratic Party to the Bush White House and its general support for the administration’s war policy.

The government’s justification for an invasion—based on the claim that Iraq poses an imminent military threat—is becoming more and more threadbare. There is open discussion in the media that the failure of UN inspectors to find evidence of Iraqi weapons of mass destruction is fueling public skepticism toward the administration’s war agitation.

Recent events in Korea have further undermined the White House propaganda campaign. Government spokesmen have been unable to explain the disparity between American policy toward North Korea and the administration’s war drive against Iraq. At least publicly, the administration insists that North Korea—which is openly developing a nuclear weapons capacity—is to be dealt with through diplomatic channels, while Iraq—where there is no evidence of nuclear weapons—is to be bombed, invaded and militarily occupied.

In the face of the failure of the government/media campaign to build mass support for a US invasion of Iraq, New York Times foreign affairs columnist Thomas Friedman has felt obliged to come to the aid of the Bush war cabal by proposing a shift in its propaganda. Hence Friedman’s January 5 column headlined “A War for Oil?”

In this thoroughly cynical piece, Friedman concedes what is obvious to anyone who has followed the US military buildup against Iraq with any objectivity: Bush’s plan to invade the country is driven, above all, by a determination to seize control of Iraqi oil.

The column is by no means the first effort by Friedman to provide a cover of legitimacy and even humaneness to Washington’s war drive. On December 1, for example, he authored a column in which he urged his readers to “pay no attention” to the inspections taking place in Iraq. Instead, to fabricate a pretext for war, he advocated that the United Nations, at the bidding of the US, kidnap Iraqi scientists, remove them and their families from Iraq, and allow American interrogators to extract “proof” of weapons of mass destruction from their captives. [See “Inventing a pretext for war against Iraq—Friedman of the Times executes an assignment for the Pentagon”]

At that time, Friedman had no quarrel with the official line that Iraq represented an imminent threat to the safety of Americans. But, despite the columnist’s urging, millions of Americans have been paying attention to the weapons inspections—as well as the rising toll of layoffs and pay cuts at home—and have grown increasingly hostile to the administration’s obsession with war, as well as to Bush himself.

Thus the “liberal” war hawk Friedman feels compelled to shore up the flagging credibility of the Bush administration’s case for war. “Is the war that the Bush team is preparing to launch in Iraq really a war for oil?” he asks. “My short answer is yes. Any war we launch in Iraq will certainly be—in part—about oil. To deny that is laughable.”

Friedman admits, quite openly, that the official reasons given by the government for a war against Iraq are lies, and crude ones at that. He writes that Bush’s “recent attempt to hype the Iraqi threat by saying that an Iraqi attack on America—which is most unlikely—‘would cripple our economy’ was embarrassing.”

He continues: “Let’s cut the nonsense. The primary reason the Bush team is more focused on Saddam [than on North Korea] is because if he were to acquire weapons of mass destruction, it might give him the leverage he has long sought—not to attack us, but to extend his influence over the world’s largest source of oil, the Persian Gulf.”

Thus, having acknowledged that the US government is lying to the American people and the world, Friedman seeks to fashion a new justification for war against Iraq. It is not a matter of self-defense, or even countering something Iraq has done. Rather, the country must be attacked and occupied because the regime might—in the future—extend its influence over the world’s largest oil reserves.

“There is nothing illegitimate or immoral about the US being concerned that an evil, megalomaniacal dictator might acquire excessive influence over the natural resource that powers the world’s industrial base,” he writes.

Leaving aside Friedman’s use of pre-packaged epithets to demonize the Iraqi ruler, this statement is remarkable for its espousal of a course that violates every cannon of international law. Friedman is asserting that the US has the right, unilaterally and preemptively, to attack any country or regime that it deems to be a threat to “the world’s industrial base.”

In other words, the US has the right to wage wars of plunder against those countries that stand in the way of its monopoly of vital natural resources. If, in the process, it violates the national sovereignty of weak and small countries, deprives the local populace of the benefits of resources located on its national soil, and kills untold thousands of people—so be it.

It is self-evident, Friedman would have us believe, that the world would be far safer and happier if the oil in the Persian Gulf were in the hands of American-based oil giants and the US military machine than if it remained in the hands of the Iraqis.

But the implications of this argument go beyond Iraq and the Persian Gulf. If Friedman’s injunction is true for Iraqi oil, then why not for Russian oil, or that of Venezuela, Nigeria and other oil-possessing nations? Why, moreover, should America’s global mission be limited to the “protection” of oil? What about iron, copper, cobalt, uranium and other vital ores? Can the US permit other nations to get control of that other increasingly scarce strategic resource—water?

The logic of Friedman’s position is clear. It is a formula for imperialist aggression and plunder not seen since the heyday of the Nazis in the 1930s and 1940s. There is no essential difference between the impulse of global domination by means of military violence that underlies Friedman’s arguments and that which was summed up in the Nazi demand for “Lebensraum.”

In line with the “liberal” pretensions of the New York Times editorial board, Friedman tries to give his defense of imperialist war a progressive twist. Advocating a “politically-correct” policy of aggression, he argues that the “Bush team would have a stronger case for fighting a war partly for oil it if made clear by its behavior that it was acting for the benefit of the planet, not simply to fuel American excesses.”

“I have no problem with a war for oil,” he writes, “if we accompany it with a real program for energy conservation.”

Friedman concludes by declaring that an oil war in Iraq “would be quite legitimate” if, after bombing and conquering the country, the US helped “Iraqis build a more progressive, democratizing Arab state.” Here the Times columnist echoes the growing chorus of liberal apologists for American imperialism, who seek to attribute a historically progressive and humanitarian role to the single most violent and destructive force on the planet.

www.scoop.co.nz Wednesday, 15 January 2003, 12:55 pm Press Release: OPEC

No 2/2003 Vienna, Austria, January 12, 2003

123rd (Extraordinary) Meeting of the OPEC Conference

The 123rd (Extraordinary) Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) convened in Vienna, Austria, on 12 January 2003, under the Chairmanship of its President, HE Abdullah bin Hamad Al Attiyah, Minister of Energy and Industry of Qatar and Head of its Delegation.

The Conference reiterated its hope that a swift and peaceful resolution of the present situation in Venezuela could be found, in both the interests of the people and Government of the Country.

Having reviewed the oil market situation, especially the demand/supply picture for the first quarter 2003, and in light of the impact of the supply shortfall on price volatility, the Conference decided to raise the OPEC-10 ceiling from 23 mb/d to 24.5 mb/d, with effect from 1 February 2003, in order to ensure adequate supplies of crude to consumers and restore balanced market conditions. In this regard, the Conference extends its support to Venezuela in its efforts to restore its market share. The adjusted ceiling will be reviewed at the next Ordinary Meeting of the Conference, which Ministers re-confirmed would take place on 11 March 2003. Member Countries affirmed their commitment to the new productionlevel and their intention to ensure that prices remain within limits deemed acceptable to both producers and consumers.

The Conference remains determined to take whatever measures, as and when deemed necessary, to maintain oil price and market stability, and states that the market will be continuously and carefully monitored.

The Conference repeated its standing call on other oil producers and exporters to continue to co-operate with OPEC for the enduring well-being of the market and the benefit of both producers and consumers.

The Conference expressed its appreciation to the Government of the Federal Republic of Austria and the authorities of the City of Vienna for their warm hospitality and the excellent arrangements made for the Meeting.

Member Countries Current quotas (b/d) Increase (b/d) *Proposed Quotas Distribution (b/d)

Algeria 735,000 48,000 782,000 Indonesia 1,192,000 78,000 1,270,000 Iran 3,377,000 220,000 3,597,000 Kuwait 1,845,000 120,000 1,966,000 Libya 1,232,000 80,000 1,312,000 Nigeria 1,894,000 124,000 2,018,000 Qatar 596,000 39,000 635,000 S. Arabia 7,476,000 488,000 7,963,000

UAE 2,007,000 131,000 2,138,000 Venezuela 2,647,000 173,000 2,819,000 Total 23,000,000 1,500,000 24,500,000

*The new quotas are effective 1st February 2003

No 1/2003 Vienna, Austria January 12, 2003

Resolutions of the 122nd (Extraordinary) Meeting of the OPEC Conference

The 122nd (Extraordinary) Meeting of the Conference of the Organization of the Petroleum Exporting Countries, held in Vienna, Austria, on December 12, 2002, adopted the following Resolutions, which, in accordance with customary procedures, have been ratified by the MemberCountries and are issued herewith:

Resolution No 122.398

The Conference,

upon the recommendation of the Board of Governors,

in accordance with Article 38 of the Statute and the Financial Regulations,

approves,

1. The Budget for the year 2003, totalling €17,599,805, of which an amount of €1,099,805 is to be financed by a transfer from the Reserve Fund Account, with the balance being contributed by the Member Countries.

2. That the contribution payable by each Member Country shall be €1,500,000 payable in one instalment not later than March 31, 2003.

Resolution No 122.399

The Conference,

upon the recommendation of the Board of Governors,

approves,

the appointment of TPA Control Wirtschaftsprüfung GmbH to act as auditors for the financial year 2002 and to submit a report thereon.

Done in Vienna this 12th Day of December 2002.

Head of the Delegation of Algeria Dr Chakib Khelil Head of the Delegation of Indonesia Dr Purnomo Yusgiantoro Head of the Delegation of the Islamic Republic of Iran Bijan Namdar Zangeneh Head of the Delegation of Iraq Dr Amer Mohammed Rasheed Head of the Delegation of Kuwait Ahmad F. Al-Ahmad Al-Sabah Head of the Delegation of the Socialist Peoples Libyan Arab Jamahiriya Dr Abdulhafid Mahmoud Zlitni Head of the Delegation of Nigeria Dr Rilwanu Lukman Head of the Delegation of Qatar Abdullah Bin Hamad Al-Attiyah Head of the Delegation of Saudi Arabia Ali I. Naimi Head of the Delegation of the United Arab Emirates Obaid Bin Saif Al-Nasseri Head of the Delegation of Venezuela Gustavo Márquez Marín