UK Foreign Secretary Jack Straw on 5 February said war was now ‘more probable’. A war in Iraq would completely shut off Iraqi oil exports, which are normally around 2 million barrels a day (b/d). It could also endanger production facilities in neighbouring countries – most obviously the 1.9 million-b/d capacity of Kuwait.

However, the predicted supply squeeze will be eased by the steady return of Venezuelan crude. Although the strike at state oil company Petroleos de Venezuela continues, the government has used other workers to bring output up to 1.2 million b/d, twice December’s output but less than half its normal capacity.

OPEC members are now working out how the effects of renewed Venezuelan production will combine with lost Iraqi output and falling oil demand in the second quarter. OPEC President and Qatari Energy & Industry Minister Abdulla al-Attiyah said on 5 February that the organisation could reduce its production quotas as early as March.

‘Given the situation as it is today, we could have a 3 million-b/d glut,’ he said, citing the seasonal fall in demand. He said the restoration of Venezuelan production would also make a quota cut more likely.

Iranian Oil Minister Bijan Namdar Zanganeh said the organisation would face a quandary. ‘We have two choices at the March meeting . to roll over or decrease,’ he said on 5 February. ‘We have many uncertainties in the market. The main issue is Iraq after Venezuela. We don’t know what will happen without clarification of the Iraqi situation.’