Oil Soars on Iraqi Move, Venezuela Fears

LONDON (Reuters) - World oil prices soared on Monday when Iraq announced an immediate suspension of oil exports in protest at Israel's incursion into Palestinian controlled areas of the West Bank.

The news prompted a frenzy of buying by traders who already feared a halt in shipments from the world's No. 4 crude exporter Venezuela.

International benchmark Brent crude oil jumped $1.01 to $27.00 per barrel by midday in London, resuming an assault on a six-month high of $28.15 seen last week.

Iraqi leader Saddam Hussein said all oil exports were suspended from Monday for a month or until Israel withdrew unconditionally.

Israeli Prime Minister Ariel Sharon vowed to press ahead with its sweeping military offensive in defiance of U.S. demands for a withdrawal.

OPEC Secretary-General Ali Rodriguez (Venezuela) said he will consult with cartel oil ministers on Tuesday and the group could hold an emergency meeting to decide policy.

Sanctions-bound Iraq is the sixth largest oil supplier to the United States, and ships four percent of world exports. Saddam has already called on other Arab producers to embargo the West for its support of Israel, and Libya has backed the call.

Fellow Gulf oil exporter Iran has said a total blockade by all Islamic states would be very a effective weapon, and supreme leader Ayatollah Ali Khamenei called on Friday for Arab states to launch a one month embargo on the West.

The world's No.1 exporter Saudi Arabia has said it had ample capacity to respond to any major disruption.

Industrialized countries fear high oil prices could damage the nascent economic recovery.

Industry sources said Venezuelan oil loadings were halted at the weekend and oilfield output was already down by half, although the Venezuelan leader insisted on Sunday that production and exports were normal.

Venezuelan state oil company executives are protesting against the government's choice of a new board of directors.

Oil market traders said as many as 25 empty oil tankers were at Venezuelan ports waiting to load on Sunday, and one source said production was already cut by 60 percent.

Venezuela supplies about 15 percent of U.S. oil imports. Latest U.S. government data shows it accounted for about 1.4 million barrels per day of crude imports and another 300,000 bpd of products such as gasoline and diesel.

President Hugo Chavez announced the sacking of seven dissidents from the state oil company on Sunday, labeling them "saboteurs."

The Organization of the Petroleum Exporting Countries has cut production by five million bpd since January 2001 to buoy prices, and in March agreed to extend output restrictions until at least its next meeting in June.

Russia and Norway, which both agreed to join OPEC in crude supply curbs, said on Monday it was too early to reconsider the policy now.

http://www.reuters.co.il/news2000/N2S8IG40.HTM

UPDATE 3 - Oil soars on export halt by Iraq and Venezuela


    (Updates price in paragraph 2) 
    By Tom Ashby 
    LONDON, April 8 (Reuters) - World oil prices soared on 
Monday when Iraq announced an immediate suspension of oil 
exports in protest at Israel's incursion into Palestinian 
controlled areas of the West Bank. 
    The news prompted a frenzy of buying by traders already 
spooked by a halt in shipments from the world's No. 4 oil 
exporter Venezuela. 
    International benchmark Brent crude oil jumped $1.28 to 
$27.27 per barrel by mid-afternoon in London, resuming an 
assault on a six-month high of $28.15 seen last week. 
    U.S. crude futures rose 99 cents to $27.20. 
    Iraqi leader Saddam Hussein said all oil exports were 
suspended from Monday for a month or until Israel withdrew 
unconditionally. 
    Sanctions-bound Iraq is the sixth largest oil supplier to 
the United States, and its two million barrels a day of exports 
account for four percent of oil traded worldwide.  
    Israeli Prime Minister Ariel Sharon vowed to press ahead 
with its sweeping military offensive in defiance of U.S. demands 
for a withdrawal. 
    Venezuelan shipments to the world market were at a 
standstill on Monday after halting over the weekend, and 
refineries reduced their processing rates. 
 State oil company executives in Latin America's top oil 
exporter, another key supplier to the United States, are 
protesting the government's choice of a new board of directors. 
    "I'm surprised markets have taken this so calmly," said Paul 
Horsnell of investment bank J.P. Morgan. 
    "Certainly there is potential for spike up to $30." 
    Prospects of higher energy costs also hit global equities 
markets, as traders fear damage to the world economic recovery. 
But oil company shares bucked the trend, rising sharply. 
    U.S. Energy Secretary Spencer Abraham said the U.S. economy 
and national security were vulnerable to the Iraqi export halt. 
    OPEC Secretary-General Ali Rodriguez said he will consult 
with cartel oil ministers on Tuesday and the group could hold an 
emergency meeting to decide policy. 
    The Arab dominated cartel controls two-thirds of world oil 
exports and could easily replace lost Iraqi and Venezuelan 
barrels after cutting five million barrels of daily production 
since January last year. 
     
    EMBARGO CALL 
    Saddam has already called on other Arab producers to embargo 
the West for its support of Israel, and Libya and Iran have 
backed the call. 
    However, OPEC heavyweights Saudi Arabia and Kuwait have both 
said they would not join any Iraqi stoppage. 
    Both these countries rely heavily on the United States for 
their defence. 
    Oil market traders said as many as 25 empty oil tankers were 
at Venezuelan ports waiting to load, and one source said 
production was already cut by 40 percent. 
    Venezuela supplies about 15 percent of U.S. oil imports. 
Latest U.S. government data shows it accounted for about 1.4 
million barrels per day of crude imports and another 300,000 bpd 
of refined products such as gasoline and diesel. 
    President Hugo Chavez announced the sacking of seven 
dissidents from the state oil company on Sunday, labelling them 
"saboteurs." 
    The Organisation of the Petroleum Exporting Countries has 
cut production by five million bpd since January 2001 to buoy 
prices, and in March agreed to extend output restrictions until 
at least its next meeting in June. 
    Russia and Norway, which both agreed to join OPEC in crude 
supply curbs, said on Monday it was too early to reconsider the 
policy now. 
    ((London newsroom +44 20 7542-8185, fax +44 20 7542 4453, 
london.energy.desk@reuters.com)) 
 
08 APR 2002 14:50:16
UPDATE 3-Oil soars on export halt by Iraq and Venezuela

[ President Hugo Chavez announced the sacking of seven dissidents from the state oil company on Sunday, labelling them "saboteurs." ]

Or, in plain English, 'entrepreneurs' or 'capitalists'.........

Yes indeed. Chavez likes the communist way of digging yourself into moral and economic Bankruptcy.

EX-president of Venezuelan state oil company accuses government of eroding morale- ***Other bones of contention were the central government's demand that the company hand over $4.4 billion in dividends last year, forcing PDVSA to borrow $500 million to pay the bill; and the oil sales to Cuba, whose leader, Fidel Castro, is Chavez's longtime mentor. · Chavez has insisted that oil sales continue to Cuba, despite an unpaid $97 million bill for past sales. ***

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