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Tuesday, 9 April, 2002, 10:08 GMT 11:08 UK
Saudi soothing deflates oil price
Crude oil prices
Ali Naimi, the Saudi Oil Minister, has assured markets and oil-dependent economies that there will not be a squeeze in the supply of oil.

Oil prices in the international marketplace immediately edged lower in response to the soothing from the world's largest oil exporter.

I do not believe anything could threaten reliability of supplies on the global level

Ali Naimi
Saudi oil minister
The price of crude oil has been rising steadily since January, and surged over 5% on Monday due to fears of reduced output from the Middle East.

"I do not believe anything could threaten reliability of supplies on the global level," said Mr Naimi, according to local press reports.

"We have proven in many previous crises that Saudi Arabia and Opec are reliable and stable source of oil supplies."

But his comments reveal a growing divisions within the Opec oil producers' cartel.

Countries that are dependent on oil imports have repeatedly warned of the harmful effects of high oil prices on economic growth.

Oil power

On Monday, Iraq ceased oil exports for 30 days in protest against Israel's military action against the Palestinians and what it called the US' "pro-Israel" stance.

Last week, Iran's supreme leader Ayatollah Ali Khamenei called on all Opec nations to take similar action.

World's largest oil exporters, million tonnes a year
Saudi Arabia 353
Russia 137
Norway 137
Venezuela 123
Iran 102
Nigeria 98
UAE 96
Mexico 91
UK 85
Iraq 75
Source: IEA
"The oil belongs to the people and can be a weapon against the West and those countries who support the savage regime of Israel," Ayatollah Khamenei said in a sermon during Friday prayers in Tehran.

Disruptions to exports from Venezuela - the world's fourth largest exporter - has compounded the fears over global oil supply.

Venezuela workers have been striking over the government's handling of the state-owned oil company, PDVSA.

This combination of events caused Opec's secretary general Ali Rodriguez to warn that the loss in global exports could lead directly to an oil crisis.

Conflicting strategies

Iran and Saudi Arabia are often at loggerheads within the cartel, where all members are obliged to abide by the same rules.

Iran is seen as favouring higher prices, while Saudi Arabia is more careful not to destroy its good relations with the US by over-inflating oil prices.

Iraq currently exports about two million barrels of crude oil a day under a United Nations programme permitted as an exception to Gulf War sanctions.

But it does not have a decision-making role within the cartel.

There has been speculation that Opec ministers will call an emergency meeting to decide the future course of action.

See also:

09 Apr 02 | Americas
Venezuela set for general strike
08 Apr 02 | Business
Opec warns of oil crisis
08 Apr 02 | Middle East
Iraq cuts off oil exports
08 Apr 02 | Business
Analysis: Another oil embargo?
08 Mar 02 | Business
Opec: The oil cartel
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