Stocks rise as doubts hover over Iraqi exports

07 June 2002

A significant leap in US crude stocks put downward pressure on the oil price in early June, amid fresh doubts over the reliability of Iraqi oil exports. Leading OPEC figures continued to point to a rollover of current production quotas at its 26 June meeting in Vienna, while outgoing Secretary-General Ali Rodriguez toured the Gulf to secure a decision on the appointment of his successor.

Data for the week ending 31 May was released on 5 June by the US government Energy Information Administration. The 6 million-barrel rise in US crude stocks came despite trader expectations of a slight fall in stocks to reflect the improving US economy. Distillate stocks also rose, by 2.6 million barrels, while gasoline stocks fell by 2.2 million barrels.

Iraqi exports were held up in early June as the new phase of the UN oil-for-food programme began. Baghdad blamed the interruptions on the retroactive pricing regime now enforced by the UN to prevent illegal or unmonitored sales. Iraqi exports in the previous week had run at 2.2 million barrels a day (b/d), a steep week-on-week increase of 1.3 million b/d. However, exports have only been running since 8 May after a one-month moratorium staged in protest at US policy in the Middle East.

Baghdad in early June added its voice to that of other OPEC members in dismissing talk of an increase in OPEC production quotas. Saudi Petroleum & Mineral Resources Minister Ali Naimi said on 1 June: 'Supply and demand are balanced and are expected to continue to be so in the next few months and thus it is not expected that OPEC will make any changes in the ceiling level or quotas at its meeting.' His comments were echoed on 2 June by Rodriguez. 'OPEC is going to preserve its present output level,' he said.

The OPEC secretary-general is touring Gulf capitals, reportedly lobbying for a fellow Venezuelan to replace him as secretary-general in mid year. Rodriguez is only halfway through his tenure at the reins, but has been called back to head the embattled state oil company Petroleos de Venezuela by President Hugo Chavez. The country's new candidate is expected to face stiff competition from Saudi Arabia's permanent OPEC representative, Suleiman al-Herbish. Iran is reported to have swung behind the kingdom in supporting his nomination to the post.

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