To: HG who wrote (5565 ) 10/16/2001 1:29:46 PM From: Win Smith Respond to of 281500 Fears, Again, of Oil Supplies at Risk nytimes.com People around here are certainly into dumping on the Saudis lately. I assume official contacts are more... diplomatic. "Watch what they do, not what they say" is appropriate, I think.If there is a serious disruption of oil supplies, it will probably not be in Venezuela or in the North Sea, but in the countries of the Persian Gulf. Those countries have taken the politically risky position of siding with the West, however quietly, in the campaign against Mr. bin Laden, thereby alienating many of their own citizens. And the proof of their support for the West is in the oil that OPEC nations continue to ship, recently forgoing a production cut even as they faced falling prices that rob them of revenue. . . . Saudi Arabia exports about eight million barrels a day and is the biggest single supplier of oil to the United States, accounting for 1.7 million barrels a day. The world's No. 2 exporter, Russia, which is not a member of OPEC, exports only 2.9 million barrels. The Saudis are the only ones with enough spare oil-field capacity to call on if there is a severe disruption elsewhere. Although Saudi Arabia led the 1973 oil embargo to protest American support of Israel in the Yom Kippur War, it later stepped in to make up shortfalls of millions of barrels a day caused by conflicts in the Middle East, including the Iranian revolution, the Iran- Iraq war and the Persian Gulf war. Even over the past year, as Iraq intermittently curtailed its exports of two million barrels a day to demand changes in the United Nations sanctions against it, Saudi Arabia acted as the "swing producer," making up much of the difference. Short of withering in the grip of a coup d'état, Saudi Arabia's oil exports could be cut if its rulers decide that they no longer can afford to support the United States-led campaign against terrorism. If the bombings kill many civilians or if the war expands quickly, the Saudis may feel that they have no choice but to veer away from the United States and reduce the flow of oil. "The only way I see that happening is if the U.S. would continue to pick targets that would include Middle Eastern oil-producing countries — and how many it picked — and if it were done in a unilateral way," said Marianne Kah, chief economist at Conoco (news/quote). "But if it continues its multilateral approach, and includes friendly Arab countries, that won't happen."