. .



 1. INTERNATIONAL   2. INDUSTRY
 3. FINANCE  4. POLICY
 5. TRADE  6. GULF

A

GULF

Dec 03 - 09, 2001

Oil boosted from Bush warning to Iraq

The price of oil rose on Tuesday after US President George W. Bush hinted that Iraq might be a future target of the US-led war on 'terrorism', stirring concerns that Gulf crude producers might become embroiled in a wider conflict.

A barrel of Benchmark Brent North Sea crude for January delivery was selling for 18.55 dollars, up 19 cents from Monday evening.

In New York, light sweet crude January-dated futures closed overnight down 27 cents at 18.69 dollars.

Prices have declined steadily in recent days as world crude producers have floundered in their efforts to agree on a pact to rein in supply and remove a glut from the market.

The Organisation of Petroleum Exporting Countries (OPEC) wants leading producers to make significant output cuts, but has held back from reducing its own outflow again until key producers such as Russia agree to follow suit.

But the prospect of a US military campaign against Iraq is enough to send a ripple through the market and support prices.

Previous crises that pitted Western oil importers against Arab Gulf crude producers have resulted in sharp spikes in the oil price, as witnessed in 1973-4, 1990 and again last autumn.

Thus Bush's warning on Monday to Iraqi President Saddam Hussein he must allow UN arms inspectors back in Iraq to prove to the world he is not developing weapons of mass destruction lent support to prices.

Asked what consequences a refusal would bring, the US leader curtly replied:

"He'll find out" a cryptic reply that fuelled speculation that the regime in Baghdad might be next on Washington's list of targets after the Afghan Taliban militia.

Iraq oil exports plunge to 11.2mn barrels

The volume of oil exported by Iraq under UN supervision plunged last week from 18.6 million to 11.2 million barrels, the office administering the United Nations oil-for-food programme said Tuesday.

In the week ending November 23, there were five loadings at Iraq's gulf port of Mina Al-Bakr and four at the Turkish Mediterranean port of Ceyhan, the only export outlets authorised under sanctions imposed on Iraq after it invaded Kuwait in August 1990.

The average price of Iraqi crude continued to slide last week to about 15.15 dollars (17.20 euros) a barrel and revenue was estimated at 170 million dollars (192 million euros), the office said.

Revenue so far in the current phase of the programme, which runs from July 4 to November 30, is about 5.6 billion euros, or 4.93 billion dollars.

The price of Iraqi oil has fallen from 24.30 dollars a barrel since mid-September.

Iraq has sold 281.3 million barrels of crude in the current phase, the 10th since the programme was set up in December 1996 to alleviate the impact of sanctions on ordinary Iraqis.

Orders are outstanding for another 114.7 million barrels. No new contracts were approved by the independent oil overseers last week, the office said.

Only 72 per cent of Iraq's oil revenues is available to pay for imports under the programme: 59 per cent in government-controlled areas in central and southern Iraq and 13 per cent for the northern Kurdish region, where goods are distribute by the UN.

Another 25 per cent is used to compensate Kuwait for war damages, and the remaining three per cent covers the administrative costs of the programme and of the UN commission monitoring Iraq's disarmament.

Mideast violence rages

Violence raged in the Middle East with a spate of new killings including a suicide bombing but Secretary of State Colin Powell said he was pleased with the work done this week by two envoys he sent to the region.

Even as reports grew of increasing violence, Powell said he hoped that a specific timetable for steps toward a ceasefire would be worked out on the ground.

"I think they are off to a good start," Powell said, referring to former Marine Corps general Anthony Zinni and Assistant Secretary of State for Near East Affairs William Burns, who began talks in the region on Monday.

Having met both Israeli Prime Minister Ariel Sharon and Palestinian leader Yasser Arafat, Burns has now travelled on to Egypt and is expected in Jordan on Friday before moving on to Saudi Arabia on Saturday.

Israelis kill Palestinian in Gaza Strip

Israeli troops shot dead a Palestinian near the Netzarim settlement in the Gaza Strip, Palestinian and Israeli sources said.

The body of the victim, aged around 20, was handed over to Palestinian police by the Israeli army.

Palestinian security head General Abdel Razek Majaida accused the Israeli army in a statement of "having committed a crime", saying the soldiers left the wounded man to die after the shooting.

An Israeli army spokesman denied the accusations, saying Israeli soldiers had opened fire at a Palestinian who rushed at them yelling "Allah akbar" (God is greatest).

"The soldiers fired, convinced they were faced with a suicide attack," the spokesman went on, saying army nurses tried to save the wounded man.

His death brings to 999 the number of those killed since the start of the 14-month intifade or Palestinian uprising, including 784 Palestinians and 193 Israelis.

Yemen's cabinet adopts draft budget with $293 mln deficit

Yemen's government has adopted a draft budget for 2002 providing for a deficit of 293 million dollars, an official source said Wednesday.

The cabinet approved Tuesday the draft budget, with revenues forecast at 2.835 billion dollars and expenditures 3.128 billion dollars, the source said.

The deficit represents three per cent of Yemen's 2001 gross domestic product (GDP), he said.

The fall in oil prices has contributed to the growing budget deficit, compunded by a reduction in the state budget, which forecasts 3.049 billion dollars in revenues and 3.136 billion dollars in expenditure for 2001.

The draft budget must now be accepted by Yemen's parliament and approved by President Ali Abdullah Saleh.

Yemen, one of the worl's least developed countries, currently produces around 480,000 barrels of oil a day.

Dubai signed a $19mn deal

The Gulf emirate of Dubai signed a 19-million-dollar deal with Germany's Audi A.G. on Sunday to provide 250 luxury cars to ferry VIPs around at the annual World Bank and International Monetary Fund meetings in 2003.

After research on "how to safely and comfortably move the large number of expected senior VIP visitors during the event ... we are proud to partner with Audi A.G.," Ibrahim Belselah, Dubai 2003 general coordinator, told reporters.

But none of the 250 Audi A-8 cars will actually be owned by Dubai 2003, and the luxury sedans will only be in the emirate from September 10 to September 27, 2003 before being moved or sold on, according to Ali Bilaloglu, managing director of Audi A.G. Middle East and Egypt.

UN votes to overhaul Iraq sanctions

The UN Security council has unanimously approved a US-Russian compromise that will revise the current sanctions against Iraq within six months, while extending the existing oil-for-food programme.

The vote came at the last moment before the current phase is due to expire at midnight on Friday.

As part of the deal, Russia said it would approve by 1 June next year a new "good review list", referring to supplies used for both military and civilian purposes that UN council members will be required to approve separately.

The United States in turn agreed to review a December 1999 resolution that would ease sanctions in return for increased cooperation with UN weapons inspectors.

US deputy ambassador James Cunningham told the Associated Press news agency that the US was satisfied with the resolution.

Iranian MPs want torture banned

Reports from Iran say 175 members of parliament have signed a petition calling for a constitutional ban on the use of torture to be properly enforced.

According to the Iran Daily newspaper, the petition said any act subjecting prisoners to physical or psychological distress, interrogating them at night, depriving them of sleep, using insulting language and keeping them in solitary confinement were all banned under the constitution.

Mid-East warns US on Iraq

Middle Eastern countries have voiced concern over US hints that Iraq may be the next military target of its war on terrorism.

Egypt and Jordan, important US allies and supporters of the campaign against terrorism, both warned the US against targeting Iraq.

The warnings came soon after European leaders expressed similar reservations, calling on the US to focus its campaign inside Afghanistan.

US officials have refused to rule out striking against Iraq, or any other country it considers to sponsor terrorism.

Gulf foreign ministers discuss Afghanistan

The foreign ministers of the Gulf states have been meeting in Oman to discuss the situation in Afghanistan and the Middle East.

The Foreign Minister of Oman, Youssef bin Alawi bin Abdullah, called on the international community to put pressure on Israel to change its policies, which he said presented a threat to stability in the Middle East.

The ministers are also discussing the political future of Afghanistan.

Emirates call on Iran to settle dispute over islands

The United Arab Emirates called for Iran "to peacefully settle" a longtime territorial dispute involving three tiny but strategic islands in the Gulf.

"The Emirates call for Iran to put an end to the occupation of the Abu Musa and the Greater and Lesser Tunbs islands, which belong to the Emirati people," the UAE's federal national council said, according to the official WAM news agency.

The text called for the dispute to be settled either via "direct negotiations" or via the International Court of Justice in The Hague, WAM said.

Iran had rejected last March a call from the Gulf Cooperation Council (GCC) to bring the case before The Hague tribunal, which is sometimes referred to as the World Court.

Egyptian FM warns US force against Iraq

Egyptian Foreign Minister Ahmed Maher warned that any use of force against Iraq by the United States in a second stage of its war on terror would be a "mistake."

"We think it would be a mistake to resort to using force against Iraq," Maher said during a speech to the Brookings Institution. He underlined that Egypt's "understanding" had been that such a use of force "will not happen."

US force against Iraq "will have a very negative impact on all of us" and "would pose serious internal problems for friends of the United States," the minister added.

"It would not solve the problem and would detract from solidarity," Maher said. "There should not be an attack on Arab countries. ... There should be no attempt to enforce things that are not contained in resolutions of the (UN) Security Council."

Strained Saudi-US ties back on track

Active US engagement on the Middle East peace front has put relations with Saudi Arabia back on track after tensions sparked by Riyadh's refusal to join the war on the Taliban and strong US media criticism.

The oil-rich kingdom, Washington's main ally in the Gulf, profusely welcomed the new US moves in the Middle East which saw Washington this week dispatch a peace mission to bring Palestinians and Israelis back to the negotiating table.

Saudi SABIC signs MTBE export deal with Egypt

Saudi Basic Industries Corp. (SABIC) announced Monday the signing of a contract with Egypt to export 45,000 tonnes of methyl tertiary-butyl ether (MTBE), an anti-pollutant chemical product.

"For the eighth consecutive year, SABIC has won a contract to supply 45,000 tonnes of MTBE in 2002 to the Egyptian General Petroleum Corp." the vice president of the SABIC group, Fahd bin Nasser bin Salma, said in a statement.

The Saudi industrial giant has an annual output of three million tonnes of MTBE, which is used to produce unleaded petrol.

Net profits of SABIC in the first nine months of this year dropped 37 per cent because of falling worldwide demand for petrochemicals along with declining oil prices due to the global economic slowdown.