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saudis and opec could fill oil gap

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    The following is an article that appeared in The Age (Melbourne) today from Associaed Press.

    Saudis and OPEC could fill oil gap, says minister
    By David McHugh
    Davos, Switzerland
    January 27 2003

    Saudi Arabia's Oil Minister said yesterday that his country and OPEC could make up for any interruption in oil supplies from a war in Iraq, adding that the price of oil had been driven too high "by all these drums of war".

    Ali Naimi said history showed producers had been able to cover disruptions such as the present seven-week strike that has reduced supplies from Venezuela.

    "Although I admit there is a perception of a threat to supply, producers and consumers are working to mitigate the threat," Mr Naimi said at a panel discussion at the World Economic Forum in Davos. "There is no reason for the price of oil to be as high as it is today."

    Mr Naimi said suppliers from the Organisation of Petroleum Exporting Countries oil cartel had stepped into the gap during past Gulf upheavals that temporarily reduced deliveries, including the 1979 Iranian revolution, the Iran-Iraq war in the 1980s, and the 1991 Gulf War.

    He pointed to Saudi Arabia's policy of holding significant production capacity of three million barrels a day in reserve.

    "No matter what we say, no matter what we do, there are always doubts whether we will deliver," Mr Naimi said. "But history is on our side."

    He said fears of a US attack on Iraq had driven prices, currently above $US33 a barrel, to an excessive level, despite OPEC efforts to produce more oil in response to the disruption in Venezuela.

    "Did we bring the price back to $US25?" he said. "We didn't, because there are all these drums of war."

    OPEC's president, Qatar's Oil Minister Abdullah bin Hamadal-Attiyah, agreed, saying "there is no shortage of oil". He said OPEC could even face an oil surplus when its members next met in March.

    OPEC decided on January 12 to raise its output ceiling by 1.5 million barrels a day, effective from February 1. Oil market participants fear Iraq may destroy its oil production facilities in case of an attack by the US


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