§ Mr. Stephen O'BrienTo ask the Secretary of State for Trade and Industry what assessment his Department has made of the effects of(a) a conflict with Iraq, (b) problems in the Venezuelan economy and (c) problems in Nigeria on world oil prices. [105678]
§ Mr. WilsonFrom mid-November 2002 to mid-March 2003 oil prices (Brent) rose by around $10 per barrel to over $33 per barrel due to a range of factors, including: a significant disruption to supplies from Venezuela; low levels of OECD commercial oil stocks, particularly in the United States and Asia-Pacific; very cold weather in the Northern Hemisphere, particularly the United States; and market uncertainty about international developments regarding Iraq.
Despite the loss of oil supplies from Iraq and a disruption to supplies from Nigeria, a combination of increased supply from producers (including a recovery in Venezuelan production), a seasonal fall in world oil demand, and reduced market uncertainty about developments regarding Iraq has seen oil prices fall to around $25 to $27 per barrel in late March.
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§ Mr. Stephen O'BrienTo ask the Secretary of State for Trade and Industry what assessment his Department has made of the effect of(a) a short and (b) a prolonged conflict in Iraq on the underlying supply and demand situation for oil. [105689]
§ Mr. WilsonNo significant disruption to the underlying supply and demand balance for oil is expected to arise from military action in Iraq. Prior to conflict, Iraqi oil production stood at around 2.5 million barrels per day or only 3 per cent. of total world oil production, of which only around 1.5 to 2 million barrels per day was exported. Over the past few months, producers have increased oil supplies and this incremental supply is now reaching markets, with more oil on the way. Combined with a seasonal downturn in world oil demand in the second quarter this is helping to balance the oil market. OPEC producers have pledged to use their available excess capacity to ensure that the market remains adequately supplied. Moreover, the International Energy Agency remains ready to reinforce producers' efforts, including through the release of stocks, should the need arise.