www.riyadhdaily.com.sa Davos, Switzerland [AFP]......................

The president of the Organisation of Petroleum Exporting Countries (OPEC) said on Saturday the oil cartel could consider a cut in output when it meets in March, to counter a potential surplus in supply. "By March we will see a three million (barrels per day, bpd) surplus... For sure if there is a surplus we will look at cutting (output)," OPEC President Abdullah bin Hamad Al-Attiyah told AFP. He was speaking on the margins of a meeting on security of oil supply in the light of a possible war on Iraq, on the third day of the World Economic Forum in Davos, Switzerland. Attiyah, who is Qatar’s Minister of Energy and Industry, told the forum there was speculation that a US-led war on Iraq could take 2.5 million bpd off the market and OPEC had reacted to balance demand and supply by raising production several times over past months. But OPEC customers were not short of oil. "There is no shortage of supply," he said. I asked (consumers) one question: ‘Do you need more oil... ?’ They answered no.

"On March 11, when OPEC will meet again, I think they (OPEC) will face a lot of difficulties with a huge surplus of oil." The possibility of an end to a lengthy oil workers’ strike in heavyweight Venezuela and the reduction in the need for heating fuel as the northern hemisphere winter drew to a close meant there could be two million bpd back on the market shortly, he said. Attiyah said fears about security of supply-that this week pushed world oil prices beyond the OPEC price band of 22-28 dollars a barrel to around 33 dollars-were not always well founded. "Security of supply will be questioned continuously, sometimes for reality and sometimes for business, sometimes for speculations on future markets. We will see many people making a lot of profits, a lot of money in the name of security of supply," he said. In New York, light sweet crude March-dated contracts rose to 33.28 dollars per barrel on Friday. The price of benchmark Brent North Sea crude oil for March delivery closed up at 30.25 dollars per barrel in London.

Traders said no-one wanted to be short ahead ahead of a key report on Monday by the chief UN weapons inspector Hans Blix on his team’s work in Iraq, which Washington accuses of developing weapons of mass destruction. Saudi Oil Minister Ali Al-Nuaimi told the Davos meeting OPEC’s aim was to reduce the world price of crude oil to 25 dollars a barrel. "We will try to get it back to 25," he said. Nuaimi said the threat of a US-led war on Iraq was pushing world crude prices higher because of fears that the Gulf region would be unable to deliver, although history had always proved the contrary. He said there were many variables affecting the price of oil and all OPEC could do was to act on those that were within its power. "We have no control if someone decides to pick a war with someone else that is a major producer. All we can do is see if we can replace that supply," he added. Saudi Arabia is the world’s largest oil producer and exporter and Iraq possesses the globe’s second largest proven reserves.

www.theaustralian.news.com.au By Robin Bromby January 27, 2003

OIL prices have soared to their highest level since the 1991 Gulf War, fuelling fears of a sharp shock to the struggling global economy. West Texas intermediate crude rose to $US35.08 a barrel on Friday night, and analysts suggested the commodity might soon approach $US40 a barrel, a price last seen in August 1990.

An International Monetary Fund study shows each $US5 rise in the oil price slices at least 0.25 per cent off world economic growth.

Modelling by Morgan Stanley shows that oil at $US40 a barrel would deliver a sharp shock to world growth.

More immediately, each $US1 rise in the oil price can also push Australian petrol prices up by 1c a litre. There is usually a lag of about two weeks between a rise in the oil price and a hit at the bowser.

Financial markets will not be reassured by the latest statements from Saudi Arabia which indicate the world's most influential producer has no immediate plans to pump more oil.

Its Petroleum Minister, Ali Al-Naimi, told the World Economic Forum at Davos in Switzerland that there was plenty of oil available and there was no reason for prices to be where they were.

Crude oil prices have risen 55 per cent over the past year, largely due to the fear that there would be a war in Iraq.

To make matters worse, strikes in Venezuela have removed most of that country's three million barrels a day out put from the world market, and even now Venezuelan production is still well below one million barrels a day.

The Venezuelan Government has fired thousands of technical staff in the oil sector, and reports yesterday said it might be four months before the strike ended and full production was resumed.

Iranian Oil Minister Bijan Zanganeh said if Iraqi production was disrupted by war, it would knock another two million barrels a day off the world total.

Morgan Stanley chief economist Stephen Roach has said a $US40 price until the end of 2003 would knock 0.8 per cent off world growth and leave the global economy mired in recession.

A spike to that level for just two months would reduce growth by 0.4 per cent.

However, prices could drop to $US19 a barrel by the end of 2003 in the event of a "clean" war in which US forces seized the oil fields intact.

www.gulf-news.com Manama |By Dr. Mohammed Al Asoomi | 26-01-2003

During the last few weeks the world's oil markets were influenced by many factors in play in opposite directions prompting Opec to intervene to curb rising crude prices and keeping them within the agreed range of $22-$28 per barrel.

Oil prices have been soaring since the end of the summer coinciding with the rising tensions caused by the American threats to wage war against Iraq.

However, action by Opec members who raised their production quotas contributed to curbing the price increase until the protests mounted against the elected President of Venezuela, hence reducing the country's oil exports and pushing oil prices to their highest levels in about 20 years.

Every time when oil prices rise or production levels fall, the Opec countries' oil ministers turn into glittering stars whose photographs and statements are carried by the world's newspapers, TV networks and other media.

Last week, the Opec ministers emerged with broad smiles after deciding to increase the Organisation's output by 1.5 million barrels daily to curb the soaring crude prices and to prevent any further rises, with Opec achieving a partial success in this regard.

Once again the saying that "Opec is a tea bag that only works in boiling water" is proved true. This means that Opec does not move except in crisis situations.

It should be noted that Opec usually succeeds in curbing the crude price increases but its intervention becomes less effective in the case of falling oil prices. In such event, it has to make great efforts to restore balance to the world's oil market by attempting to stop breaches and to cut output.

Owing to such moves dictated by the requirements and changes in the world's oil markets, rather than the strategies of oil producing and exporting countries, oil has lost a substantial part of its dominant share of the global balance of energy during the last two decades and such share is continuously being eroded.

I think that the two principal factors that contributed to crude price rise and linked to conditions of Venezuela and Iraq, both are Opec members, will soon cease to have any effect.

The Venezuelan oil production will return to normal during the next few weeks and the Iraqi situation is likely to be resolved during the first quarter of this year, as Iraq has a huge production capacity that will have a remarkable impact upon the supply and demand situation in the world markets.

While Opec's task last week was easy when the Organisation adopted a unanimous decision to make large output increases, its next task that will follow the resolution of the Iraqi issue will be much more difficult and complicated.

Once the Iraqi question is resolved, prices will start to fall. In addition, Iraq will resume production at its full available capacity to get the oil revenues that will enable it to overcome the economic consequences arising from its crisis with the U.S., and to rebuild its devastated economy.

Some of the other Opec members who quickly agreed at the recent meeting to raise oil output will be hesitant before showing any willingness to cut production once more to restore the required balance for the world's oil markets.

This often repeated picture of rises and falls in production and price levels take place from time to time in Opec, hence there is an obvious need for a business strategy that would enable it to avoid the sharp price falls arising from events beyond its control.

Such strategy should ensure for it reasons for success in building more diversified economies that are less dependent upon the exhaustible oil wealth since the modern sectors of information technology, communications and related service are capital intensive industries with such capital readily available to Opec members thanks to their enormous oil revenues.

The writer is a GCC-based economist.      

· UAE calls for dialogue at Davos forum · Young leaders scheme okays 365 projects · DI eyes Parekh project · Russia urges UAE to strengthen aviation ties · Al Fahim in logging joint venture · Sudatel, CBD get listing approval · Performance of Saudi banks good - Moody's · UAE external balance to remain in surplus · Opec needs strategy to avoid sharp price falls · Dodsal wins deals in Egypt, Oman · Arab banks target energy projects · Oman seeks $1b for refinery · Mideast refining, petrochem conference opens today · Sabic profit soars 60pc · Euro, franc dazzle as dollar weighed down by Iraq  

abcnews.go.com Jan. 25 — By Knut Engelmann

DAVOS, Switzerland (Reuters) - Saudi Arabia said on Saturday there was no lack of oil in world markets despite fears of war in Iraq, signaling the world's top oil producer has no intention to raise production further for the moment.

"There is no shortage in the market and there should be no reason for prices where they are today," Saudi Oil minister Ali al-Naimi told a panel discussion at the World Economic Forum annual meeting in the Swiss ski resort of Davos.

"We checked. We called. I checked with individual customers, refineries and others. I ask them one question: Do you feel you need more oil? And the answer is no," he said.

Oil prices have surged -- topping OPEC's $22-$28 a barrel target range -- amid fears of a U.S.-led war in Iraq and because of a seven-week-old general strike that has cut exports from OPEC member Venezuela.

In the United States, the main buyer of Venezuelan crude, prices this week hit a two-year high of $35.20 a barrel, closing at $33.40 on Friday.

"We believe $25 is the right price to meet the interests" of producers, consumers, and world oil companies, Naimi said. "We will try to get it back at $25. That's where we want it to be."

OPEC two weeks ago raised production quotas by seven percent or 1.5 million barrels a day for 10 member countries.

Despite the extra oil, Naimi said prices remained high for fear of war in Iraq.

"There are all these drums of war going around," he said. "It has nothing to do with supply. We know there is a balance of demand and supply."

Still, he pledged that Saudia Arabia and the rest of the Organization of Petroleum Exporting Countries would ensure sufficient supplies should an attack on Iraq and continued troubles in Venezuela continue to hamper world supplies.

"We have always said that regardless of the cause of the shortage, OPEC and Saudi Arabia will do their utmost to make up for the shortage," he said.

His comments echoed those of OPEC Secretary-General Alvaro Silva, who told the high-powered gathering on Friday there was nothing more OPEC could do to rein in prices.

"What can we do more? I do not agree there is a lack of oil," said Silva. "The problem of the price is the threat of war."

Naimi said oil prices would be above $40 a barrel now if Saudi Arabia had not maintained spare capacity of 3-3.5 million barrels a day.

He declined to say exactly what Saudi was pumping but reiterated that Riyadh could quickly boost oil output to full capacity of 10.5 million barrels per day. He said t would need around 90 days to get the infrastructure in place to support such high output levels in the longer term.

Saudi Arabia's production quota was set at 7.963 million barrels per day from February but sources in the kingdom say it is expected to be pumping 8.5-9 million in the next few weeks.

OPEC President Abdullah al-Attiyah highlighted concerns in the cartel that high prices might quickly turn lower if Venezuelan exports were restored and war cut Iraqi supplies for only a short period.

He warned there could be a glut of oil in world markets when the onset of warmer weather in the northern hemisphere cuts demand just as the group has raised supply.

"We calculated that we will have a three million barrel (per day) surplus by March," he told Reuters. OPEC will next meet on March 11 to review its output levels.

World demand for crude in the second quarter usually falls by around two million bpd, and another two million bpd could be flowing onstream if the strike in Venezuela is resolved by then.

www.dw-world.de   The organisation of oil exporting countries, OPEC, does not rule out another increase in production because of the threatening war against Iraq. The oil minister of Qatar and acting OPEC chairman, Abdallah ben Hamed el Attija, said in Doha, that all options are open. Despite the latest decision of the cartel to increase production quotas from next month, the oil price has kept rising on the London market. The minister said this is also partly due to the unstable situation in Venezuela. But he added that he expects the market to stabilise again in the months ahead. The next OPEC meeting will be at its Vienna headquarters on the 11th of March.