By Humberto Márquez
CARACAS, Mar 21 2003 (IPS)

Gasoline prices are expected to fall in the coming days in importing countries after the price per barrel of crude declined almost a quarter of its valueáin response to the advance of U.S. and British troops in Iraq.

The removal of Iraq from the international petroleum market is being compensated by increased output by its partners in OPEC (Organisation of Petroleum Exporting Countries).

The benchmark crude oil, Brent North Sea, which from Wednesday to Thursday decreased 1.2 dollars per 159-litre barrel, fell another 70 cents on the dollar in transactions Friday, selling at 24.8 dollars, but then turned around, reaching 25.63 dollars a barrel.

áIn New York trading, West Texas Intermediate (WTI), a light U.S.-produced crude, declined 1.27 dollars per barrel Thursday, and another 57 cents on the dollar Friday, to stand at 26.55 dollars per barrel.

The per barrel averages for the week were 28.13 dollars for Brent, 31.18 dollars for WTI and 26.60 dollars for the basket of seven OPEC benchmark crudes, reported the Energy Ministry of Venezuela, one of the oil cartel’s eleven members.

These are prices that have not been seen since November, and reflect an average decline of six dollars per barrel – 25 percent with respect to last week.

OPEC officials have attributed a value of six to eight dollars to the so-called – war premium", a situation in which prices return to market levels, as if there were no war.

This is due in large part to the fact that other oil exporting nations have been pumping as much crude as possible. Saudi Arabia, for example, has already sent some 30 million barrels of oil aboard supertankers on their way to the U.S. coast on the Gulf of Mexico, where the shipments are due to arrive in May.

Until last week Iraq exported 1.7 to 2.0 million barrels of crude per day (with around 500,000 barrels going to the United States daily through third countries) of the nearly 2.3 million barrels it produced under the ôoil for food" programme authorised by the United Nations in the context of the trade embargo against the country.

With tankers and reserves filled to capacity by the Saudis and other suppliers, there is currently more oil in the system than when Iraq was exporting and the OPEC adjusted its output quotas. The surplus with respect to November is estimated at 300,000 barrels a day with daily global consumption at 77 million barrels.

ôThere is sufficient petroleum on the market, and oil prices are at reasonable levels. There is no reason, therefore, to boost production," said Venezuela’s Alvaro Silva, OPEC secretary-general.

The organisation maintains what it considers an ideal price band of 22 to 28 dollars per barrel.

Silva says, ôWe cannot predict all possible scenarios, we cannot know if the war will last a long time, or whether there will be some catastrophe."

He stresses that in the case of an emergency OPEC will open its spigots to produce up to three million barrels more daily than the 26.5 million barrels it officially produces under its quota system.

The cartel members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.

The falling crude prices have been reflected in the prices of oil derivatives. Heating fuel dropped 4.3 cents on the dollar Friday on the New York market to 78.1 cents per gallon, while gasoline on the same wholesale market decreased to 84.6 cents per gallon, 6.3 cents less than Thursday.

The phenomenon bodes for a decrease in gasoline prices at the pumps in the United States, where the average price stands at 1.7 dollars per gallon, including the marketing costs and taxes.

Automobile drivers in the oil importing nations of the developing South are also likely to benefit in the short term. In Chile, the next two weeks are expected to see gasoline prices fall 3.3 cents on the dollar per litre, to stand at 63 to 64 cents on the dollar per litre. á However, if the conflict and Iraq is drawn out, prices could head upwards, recovering the ôwar premium".

Iraqi forces set fire to some 30 oil wells Friday in the southern region of the country where U.S. and British troops invaded, reports Britain’s defence minister Geoffrey Hoon. á Sources from the attacking militaries announced that they have the Rumaila oil field, located near the Kuwait border, under their control. The site holds 400 of Iraq’s 1,100 oil wells and produces half of the country’s output.

U.S. and British forces are also said to control the Mosul oil fields in the north of Iraq.

The oil importing nations of the South remain apprehensive about supplies, prices and the economic impacts. India, for example, imports 470 million barrels of oil annually and two-thirds come from the conflictive Persian Gulf region.

And smaller nations are also nervous. In Costa Rica, the business community fears that a prolonged war would drive up fuel prices, reduce tourism and hurt sales of Costa Rican products, such as fruit, textiles and computer parts, in the United States and Europe.

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