Oil market 'comfortable' despite Iraq, Norway

Oil market 'comfortable' despite Iraq, Norway: Gulf OPEC source

London (Platts)--24Jun2004


World oil markets are 'comfortable' despite disruptions in Iraqi crude
production and exports and a planned Norwegian oil workers' strike that
threatens to bring virtually all Norwegian offshore crude production to a
halt, a Gulf OPEC source said. 

But the Gulf source, who is familiar with the oil policy of OPEC kingpin Saudi
Arabia, said that if a real oil shortage developed OPEC would again step in to
boost output. "First of all, the market right now is in a very comfortable
situation in terms of stocks of crude and supply," the source said. "But if
there is a real shortage, OPEC will step in and add [supply]." he added.
Commenting on the Norwegian strike, which is set to begin at midnight Jun 28,
the Gulf source said: "We still don't have the full information, only
expectations. We don't deal with expectations," he said, reiterating: "The
market is really comfortable right now."

Saudi Arabia, the Gulf source said, was currently producing 9.1-mil b/d in
line with a decision announced by oil minister Ali Naimi May 21 on the eve of
talks between oil producing and consuming countries in Amsterdam. That volume
already exceeds the kingdom's new official OPEC quotas under a two-stage hike
in OPEC's current 23.5-mil b/d output ceiling agreed Jun 3 in Beirut.
Currently set at 7.638-mil b/d, the Saudi quota will rise to 8.288-mil b/d at
the beginning of July when the overall ten-member ceiling is increased by
2-mil b/d to 25.5-mil b/d. A further increment of 500,000 b/d from the
beginning of August will take the ceiling to 26-mil b/d, when the Saudi quota
will increase to 8.45-mil b/d. Asked whether Algerian oil minister Chakib
Khelil's Beirut suggestion that official OPEC quotas be suspended might be
reconsidered when OPEC next meets in Vienna on Jul 21, the Gulf source said:
"It's too early to say." But he said such a move could not be ruled out.
"Everything is possible," he said.

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