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EDITIONS
Sunday, 2 February, 2003, 12:32 GMT
Opec warns of oil oversupply
An immobilized oil tanker during general strike in Venezuela
The strike in Venezuela has disrupted oil supplies
The president of the oil cartel Opec has said there is a danger too much oil could hit the world's markets later this year, pushing down prices.

The price of crude has risen above $30 a barrel following the threat of war in Iraq and the two-month strike in Opec-producer Venezuela.

But Opec president Abdullah al-Attiyah said he predicted that Venezuelan output would recover soon, which could lead to oversupply.

And he said that even if war with Iraq did break out, the price effects would be limited.

Venezuela returns

Last month Opec members agreed to increase production in an attempt to stabilise prices.

But the Opec president said he was now worried about a possible price collapse in the April to June quarter.

"This is one point we should worry about, assuming the scenario as it is today and, for sure, if Venezuela is coming back," he said.

Venezuelan oil output had fallen to just 150,000 barrels per day (bpd) at the height of the strike, but is now estimated to be at 1.4 million bpd.

The Opec president said that within a few weeks the country's production could reach 2.8 million bpd - near its capacity.

On Sunday, opposition leaders in Venezuela said they would ease the strike against the country's president, Hugo Chavez, from Monday.

But the return to work will not include thousands of oil workers who have decided to continue their protest until Mr Chavez calls elections.

Supply worries

Saudi Arabia's oil minister, Ali al-Naimi, said there was no shortage of oil on the world's markets.

"We have responded to the demands of our customers... there is no shortage of crude supply," he told reporters ahead of an energy conference on Saturday.

But the UAE's oil minister Obaid bin Saif al-Nasseri said Opec may not be able to counter any disruption if a war in Iraq begins.

"If there is total disruption to oil production in Iraq, Opec would find it very difficult in the short period to replace that reduction of production," he said.

At the moment, Iraq is selling 2 million bpd under the United Nations oil-for-food programme.

However, Mr al-Attiyah said he did not think that military action in Iraq would lead to a big price rise.

"I believe there will be no panic. Any price spike would be brief," the Opec president said.

"I don't believe some analysts who say prices will reach $100, or $60. There is no historical evidence to support this."

See also:

02 Feb 03 | Americas
25 Jan 03 | Business
24 Jan 03 | Business
12 Jan 03 | Business
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