OPEC rounds on oil speculators playing on fears of war with Iraq

Jan 25, 2003 01:00 AM

The head of oil producers' cartel OPEC has rounded on speculators who have played on fears of war with Iraq to profit from a rise in crude prices. Abdulla Al-Attiyah said the recent rise in oil prices to more than $ 30 a barrel was based on misplaced concerns of an oil supply squeeze.
"There is no shortage of oil," Mr Al-Attiyah, OPEC president, told a meeting of world leaders. Even if the US did attack Iraq, experience of previous conflicts showed that OPEC members would be able to meet demand.
"Always in the Gulf, including the Iran-Iraq war, has the most efficiency in supply, and there has never been a delay to cargos," Mr Al-Attiyah said, adding that he would prefer an oil price of $ 25 a barrel. Speculation, rather than "reality", had played a strong hand in the current strength of crude prices. "We will see a lot of people making profits in the name of supply," he said.

The comments came at the start of the third day of the World Economic Forum's annual summit, in Davos, which has been overshadowed by the threat of US-led war against Iraq, and its impact on the global economy. US Secretary of State Colin Powell, who arrived at Davos, has said that the US has gained considerable support for any conflict. But demonstrators have begun a day of protests against the war and global protests.
Protesters are being kept away from the conference building and key hotels by a series of fences, guarded by police armed with gas grenade guns and water cannon. Mr Al-Attiyah said that oil supplies were so strong that OPEC might be considering an oil cut at its 11 March meeting. "[We] will face a large surplus in the oil market," he said.

A ring round had revealed that crude buyers were not facing supply problems -- an observation backed by Saudi Arabian Oil Minister Ali Al-Naimi. "Every one of our customers is satisfied, not concerned about his supply," Mr Al-Naimi said.
He added: "There is no reason for prices to be where they are today." Saudi Arabia had 3 mm bpd in excess supply which could be brought on line, and whose existence he credited for keeping current prices below $ 40 a barrel, and saving the global economy $ 400 mm a day in oil costs. "That's a very significant number to keep in mind," he said.

Indeed, the speakers said that while higher oil prices might boost income to producers in the short term, in the long run a weaker market was desirable. "It is in our interests to see our customers in good health," Mr Al-Attiyah said.
In a separate meeting, Mexican President Vincente Fox said he would prefer an oil price of $ 22-25 a barrel. While Mexico is an oil producer, higher crude prices would damage many trade partners, hitting inward investment and efforts to created jobs.

Source: BBC
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