- The Washington Times - Tuesday, November 12, 2002

Crude oil prices rose yesterday after a top Iraqi lawmaker signaled that his country the source of nearly 3 percent of the world's oil may not comply with a new U.N. resolution requiring unfettered arms inspections.
"In this resolution, there are many demands that cannot be met," Saddoun Hamadi, chairman of the Iraqi parliament, said in a statement broadcast on Iraqi television. The U.N. Security Council resolution threatens military action against Iraq if it refuses to cooperate with weapons inspections.
Oil prices rose 16 cents to $25.94 a barrel on the New York Mercantile Exchange. Prices have risen 31 percent this year partly on concern that exports from the Persian Gulf, source of a quarter of the world's oil, would be disrupted by a war in Iraq.
"The Iraqis have just accelerated the war calendar," said John Kilduff, senior vice president of energy risk management at Fimat USA Inc. in New York. "This is the type of statement that the U.S. needs to justify action. There's been a lot of talk recently that the Iraqis would just roll over. Well they didn't."
Saudi Arabia has said it will adjust its oil production to keep prices stable in the event of a war against Iraq. Saudi Arabia is the biggest producer in the Organization of Petroleum Exporting Countries.
Oil industry analysts say crude oil prices have been saddled with a "war premium" of $2 to $4 per barrel, meaning that the threat of war with Iraq has kept prices above typical levels.
The 10-member OPEC has sought to maintain production quotas in order to steady world oil prices in the range of $22 to $25 per barrel. There are signs, however, that some member countries are overproducing, a trend that could keep prices in check.
OPEC's daily crude oil production rose by 1.02 million barrels to 26.93 million barrels in October, with half of the increase coming from Iraq, according to Platt's, a monthly survey .
Excluding Iraq, OPEC nations boosted daily production by 520,000 barrels to 24.48 million barrels, exceeding their official limits by 2.78 million barrels.
"It used to be more subtle, but now we're seeing extreme overproduction," Peter Zipf, editor in chief of Platt's Oilgram News, said in a statement. "According to comments by OPEC officials last week, the market is absorbing the overproduction, and without it prices would be much higher."

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