- The Washington Times - Wednesday, January 8, 2003

LONDON (AP) OPEC representatives, hoping to ease fears of an oil shortage, plan an emergency meeting this weekend to discuss boosting the cartel's crude production by as much as 6.5 percent, an OPEC official said yesterday.
Oil prices have surged in recent weeks on concerns about deepening turmoil in Venezuela and a potential war against Iraq. Both countries are key members of the Organization of the Petroleum Exporting Countries. The group is considering proposals to increase output by as much as 1.5 million barrels a day in an effort to lower prices.
A spike in production would represent an abrupt reversal in OPEC policy. OPEC's 11 members decided less than a month ago to slash output by as much as 1.7 million barrels a day in the hope of preventing a price decline when seasonal demand dips in the spring.
Ministers of each member country except Algeria have agreed to meet Sunday at the group's headquarters in Vienna, Austria, the official said. Algerian minister Chakib Khelil was aboard a plane late yesterday and could not be reached to confirm whether he could attend, the official said, speaking on the condition of anonymity.
Since OPEC's decision Dec. 12 to cut production, signs of a shortage have begun to appear.
Oil shipments from Venezuela, typically OPEC's third-largest producer, have dwindled by 80 percent because of a month-old strike aimed at forcing the country's president, Hugo Chavez, from office. A U.S.-led attack on Iraq would halt exports from that country, which has the world's second-biggest crude reserves, after Saudi Arabia.
OPEC officials have said the group cannot pump enough additional crude to make up for a simultaneous loss of exports from Venezuela and Iraq, which together have historically exported roughly 4 million barrels a day. OPEC's remaining members have spare production capacity of 3.3 million barrels a day, according to the Paris-based International Energy Agency, the West's energy watchdog.
Market fears have driven crude prices well above the psychologically important threshold of $30 a barrel as a result.
Crude-oil prices slipped on news of OPEC's discussions. February contracts of North Sea Brent crude fell 87 cents a barrel, to $29.33, in London. In New York, the price of light, sweet crude for February delivery tumbled $1.02, to $31.08, a barrel.
OPEC supplies about one-third of the world's crude oil. Iraq is a member but doesn't participate in the group's production agreements because the United Nations oversees the bulk of its exports.
Saudi Arabia, OPEC's most influential member, has proposed that the group raise output by 1.5 million barrels a day.
Saudi Arabian Foreign Minister Prince Saud Al-Faisal said yesterday that his country supports an increase in OPEC output to bring down soaring oil prices. "Oil prices have significantly increased, and there should be a raise in production to bring the prices down," he said.
Several other OPEC members agree on the need to pump more oil, but have been reluctant to go as far as the Saudis.
Adam Sieminski, an oil-price strategist at Deutsche Bank, argued that OPEC is trying to put "an official stamp" on the decision many of its members have made to ignore the production cuts they agreed to last month. The cuts were to have taken effect Jan. 1.
"They're not going to materialize, not until Venezuela is back in the market," Mr. Sieminski said.

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