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 5. TRADE  6. GULF



Nov 19 - 25, 2001

Oil prices sink below 18 dollars

The price of oil sank below $18 a barrel on Thursday for the first time in over two years after Opec energy ministers squared up for a possible price war with non-Opec producers.

Brent North Sea crude for December delivery fell as low as $17.30, dow $1.45 from Wednesday evening. The last time prices were so low was in July 1999.

In New York, December-dated light sweet crude futures tumbled $1.74 to $18 a barrel.

Prices dropped after the Organization of Petroleum Exporting Countries (Opec) agreed on Wednesday to slash output by 1.5 million barrels a day more than six per cent from January 1, 2002, but only if rival producers followed with a cut of their own.

The Opec basket price dropped to $18.09 on Wednesday from $19.23 on Tuesday, the Opecna agency reported from Vienna, far below the group's target range of $22-28.

Traders said comments from Kuwaiti Oil Minister Adel al-Sebeih that he would not be surprised if the oil price fell as low as $10 a barrel was also eroding confidence.

Saudi Arabian Oil Minister Ali al-Nuaimi Al-Nuaimi appealed to non-Opec major producing countries to help resolve an energy market "crisis" sparked by the September 11 terrorist attacks.

"It is really an appeal to all major producers to work together at this time of crisis so that we can manage the market at reasonable price," al-Nuaimi told journalists.

"Absolutely not .. until everyone cooperates" he said when asked if Opec will cut its output in line with a conditional accord reached by the 11-member cartel.

But Russia has so far offered only a symbolic cut of 30,000 barrels a day, infuriating Opec energy ministers.

Jordan unveils new economic reforms programme

Jordan's Prime Minister Ali Abu Ragheb submitted a comprehensive programme of social and economic reforms to King Abdullah II Thursday, detailing multi-million-dollar projects to improve life in the kingdom.

Abu Ragheb's deputy in charge of economic affairs, Mohamed Halayka, estimated the cost of the projects at 300 million dinars (422 million dollars) and said they would focus on revamping health and education services as well as investment-tracking schemes.

Jordan hopes to raise the funds by 2002, outside the budget, from the alleviation of its seven-billion-dollar foreign debt, foreign aid and privatisation, officials said.

On October 25 Abdullah gave Abu Ragheb a three-week deadline to chart out a programme of reforms, insisting that the overall task should be aimed at reducing unemployment and poverty in Jordan.

He also called for the scrapping of the information and youth ministries as part of a government reshuffle carried out two days later by Abu Ragheb aimed at improving the cabinet's performance and cutting costs.

The king has argued that slow economic growth and high debt were plaguing Jordan and maintaining its five million people in a state of rampant poverty and unemployment.

Unemployment in Jordan stands at 12 to 13 per cent, according to official estimates, and as high as 25 per cent according to unofficial figures.

One in three Jordanians is said to live under the poverty line.

Abdullah listed his country's achievements since ascending the throne in February 1999 following the death of his father, the late King Hussein, including legislative reform to attract foreign capital.

Over the past year, he said, the economy grew by four per cent and Jordan expected to see more brisk business following the signing late September of a Free Trade Agreement with the United States, the first by an Arab country.

Opec set to slash output

Opec oil cartel agreed on Wednesday to slash output by at least one million barrels per day (bpd) to boost sagging crude prices, despite failing to win immediate support from key rival Russia.

Amid an apparent attempt at 11th-hour brinkmanship with Moscow, the cartel's ministers agreed the reduction but said they still hoped key non-Opec countries would yet offer more help to bolster crude prices.

Organization of Petroleum Exporting Countries (Opec) President Chakib Khelil said there was "consensus on at least one million" barrels per day (bpd) to be cut from the 11-member cartel's total output.

"There will be a cut," Iranian Oil Minister Bijan Namdar Zangeneh said after an informal meeting. The Iranian minister had previously urged no cut if non-Opec states failed to take action.

Opec, which produces 40 per cent of the world's crude, has been widely expected to cut its output by at least one million bpd, its fourth reduction this year.

20 years of Fahd: Saudi awaits reform

Despite political turmoil and two Gulf wars, Saudi Arabia has grown into a regional economic power in the two decades of King Fahd's rule, but the oil-rich kingdom is still awaiting genuine democratic reforms.

Celebrations of the 20th anniversary of the monarch's accession to the throne have been overshadowed by the so called anti-terror campaign in Afghanistan and strains in relations with the United States, the kingdom's main ally.

Since suffering a stroke in 1995, King Fahd has delegated much of his powers to his crown prince and half-brother, Abdullah bin Abdul Aziz, who has been running the day-to-day affairs of this vast kingdom.

But during the reign of King Fahd, Saudi Arabia has developed into an important economic power, backed by its position as home to the world's largest proven oil reserves and an OPEC kingpin.

Oil revenues grew from just 1.2 billion dollars in 1970 to 104 billion in 1980, but dropped again to about 50 billion dollars this year. Yet Gross National Product has grown from just six billion dollars in 1970 to 163 billion in 2000.

Peres backs Palestinian state

It is unclear what the boundaries of such a state would be Israeli Foreign Minister Shimon Peres has told the United Nations that there is broad agreement on the creation of a Palestinian state.

In a speech to the General Assembly in New York, Mr Peres said that, while its creation was not yet the formal policy of Israel, he acknowledged it was gaining support among other nations.

Mr Peres has endorsed an independent Palestinian state in the past, but this is the first time he has done so at the UN.

US President George W Bush told the UN on Saturday that Washington was working towards a day when two states, Israel and Palestine, would live peacefully together.

Iran wants foreign investment in natural gas

Iran Oil Minister Bijan Namdar Zangeneh called on Saturday for foreign investment in the country's natural gas sector.

"Iran welcomes all direct foreign investment, notably in the field of production of liquefied natural gas (LNG) and is ready to protect foreign capital," Zangeneh said at a conference on gas and its resources in the Middle East." He said Iranian gas exports to Turkey should begin soon.

Iran and Turkey signed in August 1996 a 20-billion dollar contract to deliver 192 billion cubic metres (6.7 trillion cubic feet) of Iranian gas to Turkey over 22 years.

Last year, they extended the contract to 25 years and the volume of exports to 228 billion cubic metres (7.9 trillion cubic feet).

But the flow of gas, which was set to start in 1999, has not yet begun, for reasons never explained.

Saudi-US relations strained over Afghanistan

The crisis over Afghanistan and the continuing violence in the Middle East have caused serious strains in the relationship between the United States and Saudi Arabia.

The two countries have had a close strategic partnership since the Second World War.

But for several months the relationship has been marked by mistrust and misunderstanding.

Look at the Saudi and American press and you would scarcely believe the two countries are close allies.

Libya condemns Afghan opposition's actions

The Libyan leader, Muammar Gaddafi, has accused the Afghan anti-Taleban fighters of behaving as ruthlessly as their hard-line enemies since entering Kabul.

In a letter to the Northern Alliance leader, Burhanuddin Rabbani, Colonel Gaddafi said the world's media had shown scenes of anti-Taleban fighters executing prisoners, shooting dead surrendering soldiers and humiliating elderly people all of which are opposed to Islamic principles.

Israeli army 'kills one' in Gaza

Palestinian medical sources said on Thursday that one Palestinian was killed and at least 20 were injured after an Israeli raid on the Khan Youris refugee camp in the Gaza Strip.

The Israeli army did not immediately make any comment, although it did say that mortar fire had been directed at the Jewish settlement of Gush Katif, and the Erez border crossing.

Some Palestinian families in Khan Younis described Israeli shelling as "indiscriminate".

The area is one of the frontlines in the constant battles between Israeli soldiers and Palestinian militants, who are protesting against what they see as the presence of Jewish settlers on occupied land.

Amnesty calls for Mid-East observers

The London-based human rights group Amnesty International has called for the urgent deployment of an international observer force to end what it says is an intolerable situation between Israelis and Palestinians.

Iran to open telecoms market

Demand for mobile communications is soaring Iran is planning to open its telecommunications sector to foreign operators in order to meet soaring public demand for telephone lines and internet access.

The government is preparing legal changes to pave the way for foreign firms to enter the market, telecommunications minister Ahmad Motamedi told the Reuters news agency.

"We are now taking our first steps towards privatisation and establishing regulatory policy which would allow the entry of the private sector," he said.

Foreign operators will be invited to provide mobile and fixed-line communications as well as internet access to Iran's 62 million consumers, he added.

Iraq must develop oilfields

Iraq needs to develop hundreds of oilfields a year to become the world's top oil reservoir, Iraqi Oil Minister Amer Mohammad Rashid said Sunday.

"Iraq needs to develop hundreds of oilfields a year to turn its potential reserves into proven reserves and become the world's top reservoir," he said, quoted by the official INA news agency.

"To that end, Iraq will resort to foreign firms in the short term, while favoring domestic and Arab firms in oil prospecting," he said.

Iraq's proven reserves currently stand at 112 billion barrels, leaving it in second place behind Saudi Arabia, whose reserves are estimated at 261 billion barrels.

Rashid said in August that Iraq aims to increase its oil reserves to 270 billion barrels by transforming potential reserves into proven reserves.

Yemen gets $50 mln loan for power plant

The Saudi Development Fund on Sunday granted Yemen a 50-million-dollar loan to finance the construction of a gas-fired power plant in Maareb, SPA news agency reported.

Saudi Finance and National Economy Minister Ibrahim Al-Assaf, who heads the Fund, and Yemeni Minister of Planning and Development Ahmad Sufan signed the loan agreement in Riyadh.

Assaf said the project aims at providing a strategic source of electricity in Yemen to meet soaring demand by the population and industry. He said more than 30 per cent of loans provided by the Fund to Yemen were allocated to the power sector.

Islamic banks 'above suspicion'

Bahrain's crown prince Saturday defended Islamic banks, some of which have been accused by Washington of funding terrorism, declaring that they were "above suspicion." "We remain committed to Islamic banks and financial institutions, and this commitment will become even stronger now because we want to show the real face of Islam, which has nothing to do with the terrorism practiced by a small group," Sheikh Salman bin Hamad Al-Khalifa told reporters during a conference of Islamic banks here.

Kish island

Located some 20 kilometers (12 miles) off Iran's southern coast, Kish island is the nation's leading "free-trade zone" and a sunny haven for both businessmen and tourists.

Kish, which literally means oval, from the island's shape, is very different from the Islamic republic's mainland, looking rather to Dubai 200 kilometers (120 miles) away, as a "bigger sister".

Visitors from all over the world, including the United States, can travel to Kish without a visa, the only exception being Israelis, arch-foes of the Iranian people and government.