www.riyadhdaily.com.sa Monday - 03 February 2003

OPEC will deal with any unforeseen development such as war on Iraq, and increase supply to meet demand, the oil cartel’s president, Abdullah bin Hamad al-Attiyah, said Sunday. "If there is a shortage of supply, OPEC will balance demand and supply," Attiyah told reporters on the sidelines of an energy and environment conference in the Emirati capital. "We have learnt from history how to deal with these situations," he said, adding that the Organisation of Petroleum Exporting Countries (OPEC) had "learnt a lot of lessons" from the 199O Iraqi invasion of Kuwait and 1991 Gulf war. Attiyah said no OPEC meeting had been scheduled during the Abu Dhabi conference attended by at least 11 oil ministers. "Only bilateral talks are taking place but not any OPEC meetings because not all the oil ministers are present. "The next OPEC meeting is on March 11 and we will discuss all options taking into account the market situation. For sure we will take into account any surprise development in the market also." In the event of a US-led attack on Iraq, the cartel could convene a snap meeting, said Attiyah, who is Qatar’s energy and industry minister. "OPEC always has a tradition, can meet any time to discuss the markets, but I hope not to see a war," he said. Saudi Oil Minister Ali Al-Nuaimi had renewed Saturday the kingdom’s pledge to activate spare oil production capacity and make up for any loss in world petroleum supply if war breaks out. The world’s top oil exporter "does not hope that a strike on Iraq happens but, if it does, it is committed to cover the needs of the market in line with its capacity," Nuaimi said. Meanwhile, Libyan Oil Minister Abdulhafidh Zlitni said on Sunday that OPEC could reduce its oil output ceiling in March if prices were declining rapidly and demand for petrol was stable. "If there are signs in March that demand is stable and prices are falling sharply then OPEC will act to reduce production," Zlitni told reporters at an energy and environment conference in Abu Dhabi. Zlitni said the oil market was well supplied and global inventories were building up, setting the stage for a sharp decline in prices. "Supplies are sufficient...and the build up of stocks will have a negative impact on prices, certainly," he said. The Libyan oil minister said most cartel members were pumping at high rates in a bid to cool-off scorching oil prices which had blasted beyond $30 a barrel. "It seems everybody now is producing above the market requirements to make the market cool," he said. OPEC last month agreed to raise its supply limits by 1.5 million barrels per day (bpd) to 24.5 million bpd to cover the supply gap left by strike-bound member Venezuela. Influential Saudi oil minister Ali al-Naimi said on Saturday the kingdom would ensure that the producers group was pumping at 24.5 million bpd.

www.iht.com Bloomberg News Monday, February 3, 2003   ABU DHABI OPEC, which supplies one-third of the world’s oil, may cut output in the second quarter to prevent a drop in prices as demand slows, the oil ministers for the United Arab Emirates and Libya said Sunday.

Ali Naimi, oil minister of Saudi Arabia, and his Qatari counterpart, Abdullah ibn Hamad Attiyah, who is also president of the Organization of the Petroleum Countries, said Saturday that supply might exceed consumption by as much as 3 million barrels per day after the Northern Hemisphere winter ends.

‘‘We definitely are concerned for the second quarter, because typically demand declines during that period,’’ Obaid ibn Saif Nasseri, oil minister of the Emirates, said Sunday. ‘‘If we see the danger of a drop in oil prices, we will meet to rectify the situation.’’

Most members of OPEC are now pumping near their limit in an attempt to lower prices from more than $31 a barrel in New York and London, a two-year high. Prices have surged two-thirds in the past year because of a strike in Venezuela, traditionally OPEC’s No. 3 producer, that has crimped that country’s oil output, as well as concern over a possible U.S.-led attack on Iraq.

Oil prices in New York have held above $30 a barrel for six weeks, the longest period in two years. A drop of $5 to $10 would ease pressure on economies in the United States and Europe, where growth has slowed and oil demand has stagnated since 1999. The unemployment rate in the United States, the world’s largest oil consumer, has risen to 6 percent. In Germany, one in 10 workers is jobless. OPEC next meets March 11.

‘‘If in March there are signs that demand is stable and prices decline sharply, OPEC will react to reduce production,’’ said Abdulhasid Mahmoud Zlitni, the Libyan oil minister. ‘‘The current buildup in global oil stocks will have a negative impact on prices.’’

The 11-member oil cartel may struggle to replace Iraqi oil should the country’s production be curtailed by an attack, Nasseri said. Only Saudi Arabia and the United Arab Emirates hold significant spare capacity, analysts say.

‘‘If there is a total disruption of oil infrastructure in Iraq, it will be very difficult for OPEC to replace that production,’’ Nasseri said. President George W. Bush of the United States has said that his administration is ready to attack Iraq, which holds the world’s second-largest oil reserves, if President Saddam Hussein does not give up his quest for weapons of mass destruction.

Saudi Arabia stands ready to fill any shortages in the market caused by a war, Naimi said Saturday. Iraq pumped 2.3 million barrels of oil a day in December, making it OPEC’s third-largest producer, according to Bloomberg estimates.

‘‘We will supply the shortages up to our capacity, whatever the source of the shortage,’’ the Saudi minister said. The kingdom has 2 million to 2.5 million barrels a day of idle capacity, he said.

Venezuela’s opposition leaders have called on most striking workers to abandon a two-month walkout and return to their jobs for a few hours a day, evidence that President Hugo Chavez has outlasted those who wanted to depose him.

Because of the strike, Venezuela is pumping about 1.5 million barrels of oil a day, or about half as much as in November, the state oil company said Friday. Striking oil workers say production is about 1 million barrels a day.

www.heraldsun.news.com.au 03feb03

OPEC will deal with any unforeseen development such as war on Iraq, and increase supply to meet demand, the oil cartel's president, Abdullah bin Hamad al-Attiyah, said yesterday. "If there's a shortage of supply, OPEC will balance demand and supply," Mr Attiyah told reporters on the sidelines of an energy and environment conference in the Emirati capital. "We've learnt from history how to deal with these situations," he said, adding that the OPEC had "learnt a lot of lessons" from the 199O Iraqi invasion of Kuwait and the 1991 Gulf war.

He said no OPEC meeting had been scheduled during the Abu Dhabi conference attended by at least 11 oil ministers.

"Only bilateral talks are taking place but not any OPEC meetings because not all the oil ministers are present.

"The next OPEC meeting is on March 11 and we will discuss all options taking into account the market situation. For sure we will take into account any surprise development in the market also."

In the event of a US-led attack on Iraq, the cartel could convene a snap meeting, said Mr Attiyah, who is Qatar's energy and industry minister. "OPEC always has a tradition, can meet any time to discuss the markets, but I hope not to see a war," he said.

In Abu Dhabi on Saturday, Saudi oil minister Ali Al-Nuaimi renewed the kingdom's pledge to activate spare oil production capacity and make up for any loss in world petroleum supply if war broke out.

The world's top oil exporter "does not hope that a strike on Iraq happens but, if it does, it is committed to cover the needs of the market in line with its capacity", he said.

On Friday, New York's light sweet crude March-dated futures were priced at $US33.51 a barrel, well above the $US22 to $US28 per barrel OPEC price band.

In London, the price of benchmark Brent North Sea crude oil for March delivery fell to $US31.06 per barrel, despite OPEC's decision in mid-January to increase production by 1.5 million barrels a day from next month.

Industry analysts have warned that war in Iraq and continuing labour unrest in Venezuela could deprive the global oil market of about five million barrels per day.

money.cnn.com February 2, 2003: 1:34 PM EST

ABU DHABI, United Arab Emirates (Reuters) - OPEC is already gearing up to fend off an oil price collapse that might follow any U.S. assault on major Gulf producer Iraq.

Although world oil prices have shot well past $30 a barrel amid war fever and political turmoil in OPEC member Venezuela, key oil ministers are warning that markets could tip into oversupply during the second quarter and spark a price crash.

"If there is danger of a glut, we have to meet and rectify the situation. Definitely we (OPEC) are concerned about the second quarter," UAE Oil Minister Obaid bin Saif al-Nasseri told reporters Sunday at an energy and environment conference.

"Typically there is less demand then, and I hope this increase or the change of the ceiling won't affect it so badly."

Nasseri was referring to a decision by the Organization of the Petroleum Exporting Countries to increase supplies by 1.5 million barrels per day (bpd) to 24.5 million bpd from Feb. 1 to cover an export shortfall from strike-bound Venezuela.

Lead OPEC producer Saudi Arabia said oil markets were not starved of crude now and vowed that the cartel would keep pumping enough oil to meet its higher output limit.

"I can assure you that we, Saudi Arabia, will make sure that 24.5 million bpd is delivered," said Oil Minister Ali al-Naimi.

But higher volumes from the exporter group may only set the stage for a sharp decline in prices during the second quarter, which typically sees a seasonal drop in demand of about two million bpd due to warmer weather in the Northern Hemisphere.

"It seems everybody now is producing above the market requirements to make the market cool," said Libyan Oil Minister Abdulhafidh Zlitni. "Supplies are sufficient... and the build up of stocks will have a negative impact on prices, certainly."

Oil market analysts share the ministers' expectation of lower prices. A Reuters poll of analysts projects that world oil prices, now at two-year highs, are set to slump by $10 a barrel in the second half of the year after any war against Iraq. No panic

In the event of a military assault, OPEC President Abdullah al-Attiyah and UAE's Nasseri expected a price spike at the start of action followed by a decline when it starts to wind down.

"I believe there will be no panic. Any price spike would be brief," said Attiyah, also oil minister of Qatar. "I don't believe some analysts who say prices will reach $100, or $60."

The OPEC chief predicted a particularly grim outlook from April if exports in fellow member Venezuela are fully restored.

"If Venezuela comes back (to full capacity), we could have four million bpd or more floating," he said, adding the excess could be at least three million bpd based on its current output.

If that proves the case and "there are signs in March that prices are falling sharply," Libya's Zlitni said OPEC could reduce supplies at its March 11 meeting.

Given Washington's military preparations in the Gulf, the OPEC meeting -- which is expected to focus on the state of world stockpiles -- could take place against the backdrop of an attack on Iraq, the world's eighth-biggest oil exporter.

In a bid to calm market fears of supply disruptions, Naimi insisted Saudi Arabia would be prepared, if needed, to make use of its excess capacity, which he pegged at 2-2.5 million bpd.

Industry sources say the kingdom, the world's biggest oil exporter, is now pumping close to 9 million bpd and Naimi has made clear Riyadh can raise that to 10 million within weeks.

The Saudi oil minister said OPEC stood ready to make up for any supply shortages on its own without major consuming countries having to release their emergency stockpiles.

But the oil minister of the UAE, the only other OPEC member with substantial excess capacity, was less confident of the cartel's ability to plug a gap in Iraqi supplies. Iraq is now selling some two million bpd of crude.

"If there is total disruption to oil production in Iraq, OPEC would find it very difficult in a short period to replace that reduction of production," Nasseri said.

His assessment might spook oil dealers fretting over a potential supply crunch. Global inventories are running on the low side, particularly in the United States due to the Venezuela strike, but Saudi's Naimi said they would soon be replenished.

"With Venezuela returning and supplies steaming to the U.S., we will see a gradual build in inventories," he said.  

www.sabcnews.com February 02, 2003, 15:15

The talks were described as 'walm and cordial' Thabo Mbeki, the South African President, warned today that a US-led military attack on Iraq would send oil prices through the roof and scupper attempts at African economic development.

Mbeki, talking to Sky Television after a meeting with Tony Blair, the British Prime Minister, said the Iraqi government had told him it was eager to co-operate with UN inspectors scouring the country for weapons of mass destruction. Mbeki, a self-appointed champion of the developing world, has campaigned against armed intervention fearing that war with Iraq could destabilise the Middle East and scuttle development efforts in Africa, the world's poorest continent.

"If you had a real war (oil prices) would shoot up to the extent that we would really have to say goodbye to African development," he said, adding that many of Africa's still crippling debt problems sprung from a surge in oil prices in the early 1970s. The threat of war in the Middle East, which supplies 40% of world crude exports, and a two-month oil strike in Venezuela have already pushed prices well beyond $30.

The looming threat of war with Iraq dominated talks between Blair and Mbeki yesterday when the South African leader delivered the same message. "It was a very frank meeting. The president told the prime minister war with Iraq could be avoided, and he was sending his deputy foreign affairs minister to Iraq to persuade the Iraqis to be more proactive," Mbeki's spokesperson told reporters.

"He said we must do everything to avoid a war which would have devastating consequences for the African continent and pushup the price of oil," he added. Blair is the strongest supporter of George W. Bush, the US President's uncompromising stance on Iraq. Both men said on Friday that Iraq had just a handful of weeks to come clean about any weapons of mass destruction or face military action.

"It is possible to resolve this matter... without going to war," Mbeki insisted. "We have been talking to the Iraqi government. What they have been saying to us is that they are very keen and very willing to co-operate fully with the inspectors." Mbeki also said any attack on Iraq must have a fresh mandate from the UN in the form of a new resolution.

Bush and Blair have reserved the right to wage war without a second resolution if it was blocked by the UN Security Council. "That decision, we are quite convinced, must come from the Security Council," Mbeki said. - Reuters