From the Guardian Unlimited
Iraq suspends oil exports
Mark Tran and agencies
Monday April 8, 2002
Iraq today jolted the oil
markets by declaring an immediate halt to oil exports for a month, or
until Israel stops its offensive against the Palestini ans.
The move, announced by Saddam Hussein in a nationally televised
speech, immediately sent prices of crude oil up by $1 to $27.35. In
recent days, oil prices have risen to a six-month high, partly
because of a pickup in the global economy, but also because of
concern over the fallout from the Israeli-Palestinian conflict.
Iraq first raised the prospect of using oil as a weapon early
last week, a call that was quickly seconded by Iran, its traditional
regional rival. But Iran's foreign ministry spokesman, Hamid Reza
Asefi, later tempered that message by ruling out any
unilateral moves.
"This is not a decision that one country alone can make. It
would be efficient if all Islamic and Arab countries cooperated on
this issue," Mr Asefi said.
However, today Libya jumped on the oil as a weapon bandwagon. "The
great Jamahiriya (Libyan republic) supports Iran's call to stop oil
supplies to countries that back the Zionist entity," the Libyan news
agency Jana reported, quoting an unnamed government official.
The report said that such a step, if supported by other Arab and Islamic
oil-producers, would "stop the Zionist train of death in Palestine".
Despite calls for using oil as a weapon against the west, the biggest oil
producers in the Arab world, Saudi Arabia and Kuwait, have little appetite
for taking this path. A meeting of Arab League foreign ministers on Saturday
made no mention of oil proposal in its final statement. By
itself, Iraq would have little effect on total oil production. Iraq
exports 1.5 million barrels a day, but Opec is sitting on enough
surplus production
capacity to compensate for the loss of Iraq's exports three times over.
Indeed oil traders have already factored the loss of Iraqi oil production into
current prices price - about $2 to $3. Besides Opec, non-Opec producers
such as Russia and Norway would be all too happy to step into gaps
left by Iraq to increase their market share.
The last time oil-producing Arab nations used oil as a
political weapon was in 1973, when reduced exports
caused a global energy crisis. Since then, the world's
wealthiest nations have created the International Energy Agency
(IEA) to provide a cushion against any similar disruption.
Based in Paris, the IEA can tap into 4 billion barrels of strategic oil
reserves maintained by its member countries - equal to more than five
years of Iraqi
production, based on t. But that consensus ishe IEA's estimate of
Iraq's output in January.
The oil shock of 1973 proved to be just as disruptive on Opec as on the
oil-importing countries. For that reason, the oil cartel, led by Saudi Arabia,
pledged in November 2000 not to use oil as a weapon
breaking down with Israel's onslaught against the Palestinians.
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