WASHINGTON'Saudi Arabia and other Organizations of the Petroleum Exporting Countries oil producers are flooding world markets with crude oil, a shift that experts say should help offset any economic dislocation from a military strike against Iraq.
The surge crude oil of production has helped wash away a five-dollar-a-barrel \war premium"" that pushed the price of crude oil above $30 in early October, industry experts say, and may have reduced the risk of spot shortages during the initial stages of a U.S.-led military offensive. If sustained, it also could boost the economies of the United States and other oil consuming countries.
""OPEC has increased production dramatically in the last 30 to 45 days, which is why we're seeing the price fall,"" said Larry Goldstein, president of the Petroleum Industry Research Foundation in New York.
The 11 members of the OPEC have had little to say on the production boom. But some experts believe it reflects a deliberate strategy by key OPEC producers to stockpile crude oil closer to end markets in the United States, Europe and Asia, where it would be less vulnerable if war breaks out, and to prevent prices from rising to dangerously high levels.
""You have the potential for Iraq being taken offline very quickly, you have the potential for the winter being severe, and you have the question of whether we're coming out of a worldwide recession or sinking into one,"" said Ed Porter, research manager at the American Petroleum Institute, an industry trade group. ""OPEC doesn't want to trigger something it didn't intend.""
Some oil analysts see less charitable motives at work. They cite evidence of an escalating battle for market share between the Saudis and other OPEC members, who are exceeding their official production quotas as never before. The competition has been exacerbated by Iraqi production hikes linked to President Saddam Hussein's efforts to placate his critics and preserve his regime.
""The Saudis are focused on the long-term market for their oil,"" said Philip K. Verleger, an energy economist in Newport Beach, Calif. ""They don't want to let anybody else capture it. If other countries increase and cheat, they'll increase and cheat. They're not philanthropic.""
But whatever the motive, the effect of sharply higher oil production is to ease a major economic concern: that war in the Middle East would spark fears of shortages.
