abcnews.go.com — By Tom Ashby

LONDON (Reuters) - Oil prices pulled back from 29-month highs Wednesday in light profit-taking as the United States and Britain worked on a U.N. mandate for war on Iraq.

A cold blast in the world's biggest heating oil market in the U.S. Northeast also underpinned prices, which are just $4.50 shy of an all-time high set after Iraq invaded Kuwait in 1990.

International benchmark Brent crude oil fell 29 cents to $32.25 per barrel, just below a two-year high of $33.10 touched last week.

U.S. crude futures dipped 33 cents to $36.63 a barrel, off a peak of $37.05 reached Tuesday, its highest level since September 2000.

Dealers reported light profit-taking after a blistering oil price rally over the last three months which has added 50 percent to the cost of crude.

"The world is facing the prospect of losing Iraq's two million barrels per day of oil exports, and perhaps some of Kuwait's oil too, at a time when oil prices are already well above $30 per barrel and stocks are abnormally low," said the Center for Global Energy Studies in a monthly report.

President Bush shrugged off global anti-war demonstrations Tuesday, while Washington and London worked on a second United Nations resolution to sanction war if Iraq fails to disarm immediately.

The United States warned its reluctant ally Turkey that time was running out to agree on the deployment on its soil of an Iraq invasion force of U.S. troops as the two states wrangled over the size of a multi-billion-dollar aid package.

The Defense Department ordered another 28,000 troops to the Gulf region this week as it builds a force of more than 200,000 for a possible invasion of the Arab oil power.

Iraq is the world's eighth biggest oil exporter, selling roughly two million barrels per day (bpd) into the international market, and traders fear war could disrupt supplies from other producers in the Middle East, which supply 40 percent of world exports.

The White House has said a new proposal could be proposed this week to the U.N. Security Council, where Bush has met opposition from France, Russia and China, who want more time for weapons inspections to continue.

TIGHT SUPPLIES AS NIGERIA DOWNS TOOLS

Concerns over supply disruptions resulting from a war come at a time when strike-hit Venezuelan exports struggle to return to normal and oil workers in Nigeria downed tools, although supplies from Africa's top producer have remained normal so far.

Venezuela's oil exports were running at about 1.3 million bpd Tuesday, roughly 50 percent of normal levels, despite government efforts to restore production.

Venezuela accounted for 13 percent of U.S. oil imports before the strike, aimed at toppling President Hugo Chavez, and the stoppage has severely dented U.S. fuel stocks, which are running at historic lows.

Analysts expect another decline across the board in U.S. oil supplies as Arctic temperatures battered the Northeast region stepping up demand for winter heating fuel.

U.S. stocks of crude oil are already below 270 million barrels, seen as the minimum level required to keep the nation's refineries running normally.

Supplies could be tightened further if there is an escalation in a strike over pay and conditions by Nigerian oil workers, which began Saturday but has not touched exports so far.

Nigeria pumps just over two million bpd and is the world's seventh biggest exporter.

Union and government officials are due to meet Wednesday to try and resolve the dispute.

www.edinburghnews.com CITY VIEW Peter Clarke

THE world’s oil markets seem to be registering rather more than the normal fears about Iraq. The price of oil is staying solidly above $30 a barrel.

Venezuela is barely supplying its normal volume of oil. Nigeria’s two million barrels a day looks dodgy and the northern hemisphere is having a severe cold spell which has driven up fuel consumption more than had been anticipated.

The only tangible news that will relieve the market is if the US announces releases some of its strategic petroleum reserve.

The Americans have 600 million barrels lying around the country. Everyone had assumed they would not be opened until the day a strike was launched on Baghdad. At present prices, the gesture of opening a few barrels may become necessary.

In the meantime, a world market price of $32 a barrel makes many marginal fields suddenly profitable again. Techniques of extraction are now so much more sophisticated it is possible to suck oil out of fields which had previously been abandoned. At $32 a barrel, many North Sea oil fields look worth opening up again.

Once again markets far removed from Iraq depend on political or military events.

Electric avenue

There will be many unintended consequences of London’s experiment in road pricing.

It will be some weeks before we can see the full effects but one early initiative looks like a winner. The authorities in London have waived the £5 a day congestion charge for electric vehicles. Electric cars have failed to become fashionable because they struggle to go above 50mph but in urban landscapes where can you possibly achieve 50mph? Four miles an hour is often impressive.

Very quickly people will buy electric cars with a new enthusiasm and it already seems car hire firms in London are bringing in more electric vehicles.

If or when Edinburgh introduces a similar road pricing scheme all the arguments of ecological virtue lead towards a similar concession for free movement for electric cars.

The whole initiative of pricing this valuable asset of urban road space is going to reveal extraordinary new economic truths. Already civil engineers are arguing they could build underground roads to match the underground railways. We’re on the start of a large adventure.

Food for thought

NOT a single complaint has been made under the Supermarkets Code of Practice for their dealing with suppliers.

This investigation was meant to give flesh to Gordon Brown’s inchoate thoughts about "rip-off Britain". The Office of Fair Trading would like to have reprimanded the supermarkets for their purchasing habits but could find no one to offer a complaint of any nature.

Does this mean food suppliers are quite content with the supermarkets procurement policies? It’s just a possibility but the greater likelihood has to be that no one was going to murmur even the smallest peep of a complaint for fear of offending the companies on whom they depend.

Once again the OFT seems blind in one eye. The price of British groceries could tumble by 40 per cent, easily, if the restrictions of the Common Agricultural Policy were lifted or scrapped.

We do have a "rip-off Britain" but it is one at which the Government connives. It was only prudent of the OFT not to mention it yet again.

www.vanguardngr.com By Victor Ahiuma-Young Wednesday, February 19, 2003

LAGOS—PETROLEUM and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), and its National Union of Petroleum and Natural Gas Workers (NUPENG) yesterday in Lagos dissociated themselves from the scarcity of petroleum products currently being experienced across the country. But a top management staff of the Nigerian National Petroleum Corporation (NNPC) told Vanguard on condition of anonymity that the scarcity was due to an alleged stoppage of supplies by NNPC contractors used to augment local supplies who are pushing for a re-negotiation of terms of contracts following rising prices of petroleum products in the international market. However, officials of the Department of Petroleum Resources (DPR) will this morning meet with its striking workers in a bid to resolve the five-day-old strike as NUPENG branch of DRP yesterday joined the strike to press for the payment of their outstanding 2000 till date allowances as well as the granting of autonomy to the DPR.

In an interview with Vanguard, General Secretary of PENGASSAN, Comrade Kenneth Narebor, said: "The action is embarked upon by our DPR branch only. It is not a national action. The DPR branch has some grievances with their management and the supervising ministry over issues of outstanding salaries and allowances owed some years back and up to date.

And also, the issue of the delay in the passing of the autonomy bill for the DPR at the National Assembly. They gave a 14-day ultimatum which expired on February 14, I know that effectively on Saturday, February 15, they embarked on the strike action. It has nothing to do with the distribution and supply of fuel for local consumption at all. It is not yet a national action. There is no way it should affect fuel supplies in the country. This current scarcity could be as a result of a breakdown of the supply system. I cannot say categorically. It has nothing to do with the strike by workers of DPR. The strike can only affect the export terminal and not local supplies. It is just a unit of PENGASSAN that is on strike. If it were to affect the general public, we would have given enough notice.

"We would look at the events as they unfold . Presently, the management of DPR has called for a meeting for today (yesterday) but we asked for the meeting to be moved to tomorrow (today) for logistics reasons so that our branch officials in DPR will be able to make it to Lagos from their different locations.

We are hoping that, that meeting would be fruitful. The issues are straight forward.

Payment of outstanding salaries and allowances. It is our hope that DPR will be able to meet those demands. As for the autonomy, we are also hopeful that the National Assembly will expedite action on the passage of the bill.

"But if for any reason, the outcome of the meeting with DPR management is not fruitful, we have our processes in the association. We have to take the matter to our National Executive Council (NEC) for review. It’s only then after, we would know whether the action can extend beyond what it is."

On his part, the general secretary of NUPENG, Comrade Joseph Akinlaja declared: "It is not true that NUPENG is responsible for the scarcity of fuel being experienced in the country. What is responsible for this, I think, is the low quantity of products available. NUPENG is like the proverbial tortoise. Once there is no fuel, the first point of call is NUPENG. NUPENG has 140 branches. The DPR is just one. So, if NUPENG branch of DPR joined the strike this morning (yesterday) that could not have been responsible for the scarcity of fuel that started last week. The solution to the problem lies with NNPC. Our branch in DPR only joined the strike today."

But a senior management staff of NNPC told Vanguard on condition of anonymity that the scarcity is as a result of an alleged stoppage of supplies by NNPC foreign contractors used to supplement local supplies who are said to be currently pushing for a review of terms of contract as a result of rising prices of fuel in the international market.

He said: "look the problem is the foreign contractors that the NNPC uses to boost local supplies. Since the problem in Venezuela and the face-off in the gulf region between Iraq and U.S which has made prices of fuel to be on the increase in the international market, the contractors have been asking for re-negotiation of terms of contracts. But the NNPC has not yielded. I think they have not been supplying as required. That is the problem for now. Until it is resolved, this scarcity may persist."

www.alertnet.org 18 Feb 2003 21:31

CAIRO, Feb 18 (Reuters) - The Organization of Petroleum Exporting Countries will act quickly to avoid oil market shortages in case of a war against Iraq, OPEC President Abdullah bin Hamad al-Attiyah said in a television interview broadcast on Tuesday.

"In cases of tension...we deal with it clearly and quickly to restore a balance between supply and demand in the market, and to restore stability. We do not want consumers to feel that they will face a shortage in supplies," Attiyah said in an interview with the Qatar-based Arabic-language al-Jazeera channel.

Attiyah, who is also Qatar's energy minister, was responding to a question about how OPEC would react to a possible war in Iraq.

Oil prices forged to fresh 29-month highs on Tuesday as the United States and Britain pushed for a second U.N. resolution on Iraq that could open the way to war on the world's eighth largest oil exporter.

Traders fear military conflict in Iraq could upset oil flows from the Middle East, which pumps nearly a third of the world's crude. An 11-week workers strike in Venezuela has already depleted world oil supplies.

reuters.com Tue February 18, 2003 02:54 PM ET

NEW YORK (Reuters) - Oil prices forged to fresh 29-month highs on Tuesday as the United States and Britain pushed for a second U.N. resolution on Iraq that could open the way to war on the world's eighth largest oil exporter.

A snowstorm that swept across the eastern United States over the weekend supported prices, boosting heating demand at a time when U.S. fuel stocks have already fallen well below normal levels.

U.S. crude futures, which were closed on Monday for the Presidents' Day holiday, rose 25 cents to $37.05, the highest level since September 2000, and barely four dollars below peaks struck during the 1990-1991 Gulf War.

International benchmark Brent crude oil rose 63 cents to $32.55 per barrel, within a dollar of its two-year high of $33.10 hit last week.

Prices rose as the White House said it could propose a new U.N. resolution as soon as this week calling for the use of force to disarm Iraq. The United States has said it will act without U.N. agreement if necessary.

"It could take place as soon as this week. It could be next week. The timing will be determined as a result of the ongoing conversations within our government and with the allies," White House spokesman Ari Fleischer said.

Traders fear military conflict in Iraq could upset oil flows from the Middle East, which pumps nearly a third of the world's crude. An 11-week workers strike in Venezuela has already depleted world oil supplies.

The Defense Department has ordered a further 28,000 troops to the Gulf region as the United States builds a military force of more than 200,000 for a possible war with Iraq, military officials said on Tuesday.

European Union leaders closed ranks on Monday to warn Iraq that United Nations arms inspections could not go on indefinitely without Baghdad's cooperation and declared for the first time that war could be the last resort.

"An attack at the end of February through to the middle of March still seems almost inevitable," said Lawrence Eagles of brokers GNI.

IRAQ URGES OIL AS ANTI-WAR WEAPON

Iraqi Foreign Minister Naji Sabri urged Arab nations to use their massive oil wealth as a weapon against war. A similar plea fell on deaf ears last April, when Iraq urged an embargo to protest Israeli violence against Palestinians.

The Arab-dominated Organization of the Petroleum Exporting Countries has vowed to do its best to cover any shortfall in Iraqi supply.

OPEC will probably suspend oil output quotas temporarily and pump at will in the event of war cutting off Iraqi supplies, an OPEC source said on Monday.

U.S. households are already facing higher heating costs, after heating oil futures rose to their highest level since 1979 this month. Supply has tightened as high crude prices force domestic refiners to cut back production.

After a series of severe storms in the U.S. northeast already this winter, the world's largest heating oil market was again battered by Arctic cold this week.

Heavy blizzards hit New England on Monday, closing most major airports between Washington and New York. Temperatures in the Northeast are forecast to rise this week then fall back again.

Concerns are rising that the scramble to meet heating demand will prevent refiners making enough gasoline to meet summer vacation demand, meaning higher prices at the pump later this year.

Another potential supply disruption loomed as Nigerian oil workers threatened to cut off exports from Africa's top producer in a strike that began on Saturday.

Blue-collar Nigerian oil workers joined a strike by white-collar workers on Tuesday, but oil companies managed to maintain exports using senior staff to replace strikers.

Talks on ending the strike have been postponed by one day to Wednesday to ensure fuller attendance.