OPEC chief says war fear adds $5 to price of oil

Another rise in output isn't needed now, he says

February 25, 2003|By BLOOMBERG NEWS

LONDON - Oil consumers worldwide have enough supplies to meet demand, the OPEC president said yesterday, adding that prices are inflated by traders' concern that a war with Iraq will disrupt shipments.

"The answer from our customers is, they don't see the need for more oil now," Abdullah bin Hamad al-Attiyah, the OPEC president and Qatari oil minister, told reporters in London, where he is attending an oil conference. Oil prices are inflated by at least $5 a barrel because of war concern, he said.

The Organization of the Petroleum Exporting Countries, which pumps a third of the world's oil, meets March 11 to consider oil quotas for the second quarter, when demand will slow because of the end of winter in the Northern Hemisphere. Oil prices in London have surged 65 percent in the past year to $32.92 a barrel.

The OPEC president said ministers would discuss at next month's meeting in Vienna, Austria, whether to suspend production quotas temporarily to boost supplies should Iraqi oil output be halted because of a U.S.-led attack, among other scenarios.

"We will meet in March and we will discuss it," he said. "We will discuss all options."

Last week, OPEC officials said the group might suspend quotas in the event Iraq's exports are cut off by an attack. The country produces about 3.2 percent of the world's oil.

OPEC raised its output target by 6.5 percent, or 1.5 million barrels a day, starting Feb. 1 in an effort to lower prices, which have surged on concern of an attack on Iraq and a strike in Venezuela that crimped the nation's exports.

The group, except Iraq, restrains oil output to keep its oil price benchmark between $22 a barrel and $28. The price has stayed above the range since Dec. 16. Iraq has no quota because its trade is under United Nations oversight.

OPEC will consider implementing an informal accord to raise quotas by at least 500,000 barrels a day should the oil benchmark stay above $28 a barrel for 20 consecutive trading days, al-Attiyah said. The 20th day would be Friday.

The agreement "can be triggered," though ministers may decide to wait until they meet before taking any decision on changing quotas.

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