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Gold/Mining/Energy : Oil & Gas Price Economics -- Ignore unavailable to you. Want to Upgrade?

To: Ed Ajootian who wrote (244)	9/14/2000 4:51:25 PM
From: kingfisher	Read Replies (1) \| Respond to of 350

Iraq's crude clout kindles concern The country's output is increasingly important - and worrisome - - to consuming nations, ALLAN FREEMAN reports from Vienna ALLAN FREEMAN Thursday, September 14, 2000 As the world worries once again about the soaring price of oil, Iraq has emerged as a key supplier that consuming nations are more dependent on than ever, even though their governments might despise the policies of Iraqi President Saddam Hussein. Although Iraq is subject to sanctions under the United Nations' so-called oil-for-food system, its oil industry is actually producing flat out, pumping 2.9 million barrels of oil a day, virtually all of it exported. With crude currently in heavy demand, it's oil that's essential. "Suppose that Iraq, for some reason or other, decided to stop producing," speculated William Edwards, a Houston oil price consultant in an interview yesterday. "You lose 2.5 million barrels a day that can't be replaced. It could create havoc. We are very dependent on those supplies." That oil is especially important to the United States, which imported an average of 725,000 barrels a day of Iraqi crude last year, making it the fifth-largest U.S. oil supplier behind Canada, Saudi Arabia, Venezuela and Mexico. "If Iraq were tomorrow to stop exporting, we'd be 2.5 million [barrels] a day out in a market where production capacity is quite tight," said Mehdi Varzi, director of research at Dresdner Kleinwort Benson, a London stockbroker. "They do have a kind of a swing role to play and this could be quite a sensitive role as we get into the middle of the winter," Mr. Varzi said, noting that Iraq reduced its output for three months last year and the world lost 100 million barrels of oil. "They could be a wild card if they stop or lower exports when the current UN oil-for-food resolution comes up for renewal in December." Yet because of UN sanctions, Iraq is no longer included in the Organization of Petroleum Exporting Countries' oil production quotas. When OPEC decided yesterday to increase production by 3.2 per cent or 800,000 barrels a day in an effort to reduce soaring prices, Iraq was not included in the higher quotas, even though it's a founding member of the 11-nation oil-producing group. That's because under the sanctions, OPEC doesn't determine the quantity of Iraq's oil output -- the UN does. So while Iraq's Oil Minister, Amer Mohammed Rasheed, participated in last weekend's meeting of OPEC ministers here in Vienna, Iraq wasn't part of the agreement to increase output. That's the way it has been for the past decade since the Persian Gulf war and the imposition. "The Iraqis are really isolated in OPEC," Mr. Varzi said. "Nobody really talks to them in terms of seriously negotiating with them. To OPEC, Iraq is really a UN problem, not an OPEC problem. Once the UN releases sanctions from Iraq, it will get back into the quota system as a normal producer." The UN sanctions were originally imposed in August, 1990, after Iraq invaded Kuwait. They were revised in 1996 to permit oil sales in an oil-for-food program that allowed Iraq to sell up to $5.2-billion (U.S.) of oil every six months. The limit on how much oil Iraq could sell was lifted last year, but the UN still controls the trade by placing money from the sales in escrow accounts and monitoring purchases of food, medicine and oil-production equipment made with the money, as well as compensation for Kuwaiti citizens and businesses. Iraq wants to see complete lifting of the sanctions. In a television interview yesterday, Tariq Aziz, Iraq's deputy premier, said his country is producing as much oil as it can, and he insisted that the current oil squeeze is not the fault of the OPEC countries. "Our analysis of the situation is that the problem is not shortage of fuel on the market," Mr. Aziz said. "The core of the matter is the taxes imposed by the United States and Western governments. They don't want to reconsider the taxes and make them more appropriate to the market realities." -------------------------------------------------------------------------------- TSE 300 +257.53 11007.10 DJIA -83.34 11098.84 S&P500 -1.41 1483.50 Nasdaq +37.0 3930.8 CDNX +3.10 3630.3 FTSE100 +78 6556 Nikkei +22.8 16213.3 HSeng -235 16395 DJ Net +7.94 312.19 Delayed 20 minutes. Help. Top 10 List This week's top 10 list: Top 10 Olympic events gone and almost forgotten Previous top 10 list: Top 10 Tire Facts Weekend Globe Highlights of the Weekend Globe. Morning Smile Overheard at the Canadian Open: "What does a golf pro have to shoot to win a tournament?" Tiger Woods. Arnie Lind, Regina