Oil experts warn that high oil prices give Saddam Hussein new power

Oil experts, attending a petroleum conference in Singapore, have warned that soaring oil prices and demand have thrust new power into the hands of Iraqi leader Saddam Hussein. The experts also said oil prices will continue to be volatile on soaring demand and inadequate supply.
"Global stocks are bound to remain low through the next two quarters of peak seasonal demand (in the northern hemisphere winter)," said Petroleum Argus in its newsletter -- Argus Global Markets -- circulated at the conference. Argus said the world's spare capacity has fallen to 2.7 mm bpd, lower than Iraq's 3 mm bpd output, making Baghdad a powerful market player.
"Saddam Hussein has the oil price in the palm of his hand," it said. The Iraqi leader "now controls marginal supply," meaning that if Iraq halts output, "the industry would be hard pressed to replace the missing oil," it said. Most producers have virtually no capacity to fill in any shortfall.

Only Saudi Arabia and the United Arab Emirates have the capacity to replenish any shortage if Iraq stops exports but it could take several months to bring the oil to consumers because spare capacity is located deep in the Arabian peninsula.
"It would take up to three months for Riyadh to restart all its spare capacity. Even if spare tankers could be found, the oil would take over another month to get to consumer markets," it said.