27 September 2000 Disruptions forecast as oil supply dwindles

SINGAPORE Oil experts warned yesterday of the threat of oil supply disruptions as rising demand outstrips supply amid dwindling spare capacity. Soaring oil prices and demand have also thrust new power into the hands of Iraqi leader Saddam Hussein, they said.

The experts attending a petroleum conference in Singapore said oil prices would continue to be volatile on soaring demand and inadequate supply.

"Global stocks are bound to remain low through the next two quarters of peak seasonal demand (in the northern hemisphere winter)," said Petroleum Argus in its newsletter, Argus Global Markets.

Marcel Kramer, president for the Asia-Pacific operations of Norwegian oil trading firm StatOil, said: "There is a looming monster of an interruption of supply."

Argus said the world's spare capacity has fallen to 2,7-million barrels a day lower than Iraq's 3-million barrels a day output, making Baghdad a powerful market player. "Saddam Hussein has the oil price in the palm of his hand," it said.

The Iraqi leader "now controls marginal supply," meaning that if Iraq halts output, "the industry would be hard pressed to replace the missing oil," it said.

Most producers have virtually no capacity to fill in any shortfall.

Only Saudi Arabia and the United Arab Emirates have the capacity to replenish any shortage if Iraq stops exports.

However, it could take several months to bring the oil to consumers because spare capacity is located deep in the Arabian peninsula, Argus Petroleum said.

Kramer said that Asian governments should step up consultations to deal with the rising costs which have stirred up political unrest and threatened to stall economic recovery. Sapa-AFP.

http://www.bday.co.za/bday/content/direct/0,3523,708224-6098-0,00.html

-- Martin Thompson (mthom1927@aol.com), September 27, 2000

Answers

The writer is oh, so correct. Saddam has us right where he wants us. Wouldn't surprise me at all if he announces a one month freeze on exports in the next few weeks--right before our election--to get back at Bill Clinton for all those bombings.

Don't laugh. He took his oil off the market for three weeks in Nov.-Dec. last year. He could easily do it again.

-- Uncle Fred (dogboy45@bigfoot.com), September 27, 2000.

Hey Uncle! Looking at it from a different perspective, its not Saddam that has us exactly where he wants us, I see it this way. The American consumer didn't learn his lesson from the last energy crisis and we painted ourselves into a corner. Since the last energy crisis we've had a couple decades to develop alternative energy. Did we? A little bit, not much. What did we do instead. We replaced the Olds 98, Buick LeSabres, Chevy Impalas with SUVs including the Excursion which is bigger than ANY of the old land yachts.

So, did Saddam also dictate how we would waste energy resources as well? Got to admit it, ol' Saddam is pretty crafty forcing us to be energy wasteful.

-- Guy Daley (guydaley@altavista.com), September 28, 2000.