U.S. oil supply low; no Iraq restart soon

By HIL ANDERSON, UPI Chief Energy Correspondent  |  April 16, 2003 at 6:33 PM
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LOS ANGELES, April 16 (UPI) -- President George W. Bush's call Wednesday for the lifting of U.N. sanctions moved Iraq a step closer to resuming its oil exports, although it remained a good bet that world crude supplies would become tighter before any significant amounts of Iraqi oil hit the market.

The president told a Missouri audience that the time had come for the removal of the sanctions imposed on Baghdad some 10 years ago, which had caused not only hardship for Iraqis but had also caused Iraq's once-thriving oil sector to fall into disrepair.

"Emergency supplies are now moving freely to Iraq from many countries," the president said. "Now that Iraq is liberated, the United Nations should lift economic sanctions on that country."

Even if Iraq is relieved of the limits on its exports under the United Nations' oil-for-food program, analysts estimate that it will take several weeks of maintenance and nothing less than the formation of a new government authority before they can actually resume exports.

Iraq's U.N. exports were halted just before the war started and U.S. Special Forces troops this week shut down a pipeline that had carried crude from Iraq to neighboring Syria in violation of the sanctions.

The coalition sees oil revenues as a major component of the monumental rebuilding task that lies ahead for Iraq.

American motorists also have a stake in the resumption of Iraqi oil exports as the summer driving season looms. Although retail gasoline prices have eased in recent weeks, U.S. fuel supplies remain a concern.

Meanwhile, crude prices held above $29 per barrel on the New York Mercantile Exchange on Wednesday as the United States failed in the past week to build up its gasoline inventory ahead of summer.

The U.S. Energy Information Administration said crude supplies in the United States were virtually unchanged while those of gasoline fell 300,000 barrels -- a relatively small amount, but not what traders wanted to see at a time of the year when inventories should be increasing in preparation for higher summer demand.

"Crude oil refinery inputs increased slightly to nearly 15.5 million barrels per day during the week ending April 11, the highest average since the week ending July 26, 2002," the EIA observed. "Despite the slight increase, decreases were seen in refinery output of distillate fuel and gasoline, while jet fuel output was essentially flat compared to the previous week."

OPEC members have given consistent hints that the group's export quotas would be lowered when it meets in Vienna on April 24, despite the urging of oil-consuming nations to hold off until Iraq's timetable is better defined.

It's not even certain who will represent Iraq in Vienna. A U.S. State Department spokesman had no comment Wednesday when asked about the intriguing possibility that none other than the United States would be appointing the Iraqi delegate.

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