The decision by Iraq to suspend oil exports has had little effect on crude oil markets and supply levels are adequate, the International Energy Agency said on Tuesday, June 12. However, in its monthly report, the IEA said the crude oil market should tighten again when refiners buy crude in response to increased demand during the holiday season in major industrialized countries such as Japan and the United States.
Baghdad suspended oil exports on June 4 for one month to protest at US and British plans for so-called "smart" sanctions against Iraq, which are due to be voted on by the United Nations Security Council at the beginning of July.
Iraq is also objecting to the limited extension of the UN's "oil-for-food" programme, which allows the country to export part of its oil output under certain conditions. The UN Security Council decided to extend the scheme by one month instead of the usual six months.
The IEA said that the suspension of Iraqi deliveries removed 2.1 million barrels a day from the market.
Saudi Arabia and other members of the Organization of Petroleum Exporting Countries said they would raise exports to compensate for eventual shortages on the market.
OPEC decided at a ministerial conference on June 5 in Vienna to maintain existing production quotas despite the Iraqi decision and to meet again on July 3 to reassess the situation. The IEA noted that oil reserves in industrialized countries had increased by 40 million barrels in April from the figure for the previous month, in line with the usual seasonal pattern.
Most of the increase was accounted for by finished products, including petrol, but crude oil reserves also increased in the United States.
The IEA did not revise its forecast for world oil demand in 2001, which remains at 76.55 million barrels per day.
With Asian and European economies "under pressure", the United States, which accounted for half of the growth in demand for oil during the first quarter, should remain the principal source of growth for the whole year, the IEA predicted.
The growth in demand for oil in China and in the former Soviet states should be relatively unaffected by a slowdown in the world economy, it added.
Crude oil prices rose sharply in May before they stabilized at the end of the month.
Oil refinery margins have fallen in most regions and only remain high in the United States, according to the IEA. —(AFP)
© Agence France Presse
© 2001 Mena Report (www.menareport.com)