iea says oil nations lack capacity to fill halt in

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    IEA Says Oil Nations Lack Capacity to Fill Halt in Iraq Supply
    By Tim Coulter

    Paris, March 12 (Bloomberg) -- Oil producers worldwide have too little spare capacity to fill the gap should an attack on Iraq halt output from the nation, the Middle East's third-largest oil supplier, the International Energy Agency said.

    Saudi Arabia and other countries have 900,000 barrels of oil output now idle, the group said, less than the 2.49 million pumped each day last month by Iraq. The world this year will consume an average of 78 million barrels a day, said the IEA, which represents the U.S. and other oil-importing nations.

    Oil prices in London have soared 40 percent in the past year in London to around $33 a barrel as concern among traders grew that an attack on Iraq will disrupt Middle East oil shipments. U.S. oil inventories are among the lowest of the past three decades, leading OPEC yesterday to pledge to fill any shortages should a war erupt.

    ``Industry oil stocks are tight,'' the agency said in a monthly report. ``A further supply disruption would tax a system operating at close to capacity.''

    Easing pressure on markets will be a seasonal second-quarter slowdown in demand, which will drop by 1.6 million barrels a day from the first to 76.6 million barrels a day, the group said. Its forecast for average consumption this year was unchanged from last month's estimate.

    Saudi Arabia and other members of the Organization of Petroleum Exporting Countries pumped more in February in a bid to prevent shortfalls brought on by rising demand and a strike in Venezuela that reduced that nation's shipments. OPEC's 10 members with quotas pumped 24.67 million barrels a day in February, the IEA said, up 1.5 million from January.

    Inventories Drop

    With demand rising and Venezuelan exports reduced, oil inventories declined. In January, inventories fell 44 million barrels to 2.440 billion in nations belonging to the Organization for Economic Cooperation and Development, the IEA said. That equaled 50 days of demand, about five less than the same time a year earlier.

    Brent crude oil was down 37 cents at $32.92 a barrel on the International Petroleum Exchange as of 8:17 a.m. in London.

    The IEA coordinates the release of oil from strategic inventories in case of shortages. Supplies from stocks controlled by the agency are available ``if required,'' the report said.

    World oil production in February averaged 79.4 million barrels a day, 1.95 million more than in January, as OPEC quotas increased and shipments rebounded from Venezuela.

    OPEC on Jan. 12 agreed to raise output targets by 1.5 million barrels a day, or 6.5 percent, to 24.5 million starting Feb. 1. The group at a meeting yesterday in Vienna agreed to make no change to its output goal.

    Output in Venezuela, traditionally OPEC's third-largest producer, rose 850,000 barrels a day to 1.43 million barrels a day on average in the month, the IEA said.

    The 11-nation OPEC holds almost 80 percent of oil reserves and pumps only a third of the world's supply because members restrain output to bolster prices. The Venezuelan strike has lowered the amount of spare oil capacity the group can bring on stream to meet shortages.

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