Iraq Causes Uncertainty On Oil Market

Oil prices fell following the bearish supply comments but have risen in recent weeks amid mounting press reports that the United States is preparing war plans against Iraq, which it accuses of building weapons of mass destruction. But it is still difficult to predict the future without knowing Russia’s position in this situation. OPEC, which controls two-thirds of world oil exports, has slashed output by 20 per cent since the beginning of 2001, putting 5 million barrels per day of output in mothballs. Many oil-exporting countries are itching to open the taps again as producers outside the Middle East-dominated group, such as Russia and Norway, take market share. Algeria and Nigeria are calling for an increase in their OPEC quotas, even as concerns over OPEC overproduction continues. Meanwhile, Opec must raise oil production to keep crude prices from rising too high and prevent world oil inventories from dropping below their 5-year average. The EIA also lowered its estimate for US oil demand in the current quarter by 40,000 bpd to 19.83 million bpd and raised its projection for oil demand in the fourth quarter by150,000 bpd to 20.04 million bpd. Reversing the decline during the first half of the year, total (US) petroleum products demand during the second half is projected to climb 365,000 barrels per day, or 1.8 per cent, with the bulk of the increase occurring in the final quarter. ©

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