OPEC head says $40 oil could prompt emergency

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OPEC head says $40 oil could prompt emergency

CARACAS, Sept 19 (Reuters) - The president of OPEC said on Tuesday that rocketing world oil prices are being fueled by speculation and are out of the oil cartel's control. But Venezuelan Ali Rodriguez said oil at $40 a barrel could prompt "emergency" measures by the group of nations that controls two-thirds of the world's petroleum exports.

Crude oil prices, now around their highest levels since the 1991 Gulf War, should fall next month when the Organization of Petroleum Exporting Countries' latest supply increase -- agreed upon last week -- hits the market, he said.

But the situation will become worrisome if prices fail to come back down, he added.

"The oil markets are not yet in an emergency situation, but they could become so," he told reporters after a meeting at the Foreign Ministry.

"If prices reach $40, it would without doubt be a delicate situation. If it is permanent, then it would be an emergency, but if it's temporary then it wouldn't be," he said.

U.S. light crude futures set a post Gulf War peak of $37.15 a barrel on Monday, but retreated on Tuesday to $36.50.

The United States said Tuesday that $38 per barrel was a "dangerously high" price.

Consumer nations such as the U.S. and European states are worried that high prices, which have already sparked mass protests in Britain and France, will stoke inflation and dampen world economic growth.

Rodriguez reiterated his belief that the price spike has been fueled more by refining bottlenecks, transport problems and financial market speculation than a fundamental shortage of crude oil.

He said there was no need yet for an emergency meeting of OPEC's oil ministers, but he noted that cartel heads of state and oil ministers are due to meet in Caracas next week.

No revision of production levels was planned at next week's meeting "unless there is an extreme emergency situation," he said.

OPEC oil ministers also plan an extraordinary session in Vienna Nov. 12 to review the October supply increase.

If world oil demand keeps rising next year as OPEC expects, Rodriguez said 10 of the cartel's 11 members -- all but Iraq --should have fully restored supply by the third quarter of 2001 to its level before the 1998 and 1999 output cuts of 4.3 million barrels per day (bpd) that propelled oil prices from 13-year lows.

OPEC has restored about 3.2 million bpd of the output cuts in a series of production hikes this year. It argues that the current price spike is a short-term speculative phenomenon outside its control.

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-- Martin Thompson (mthom1927@aol.com), September 19, 2000

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In an emergency call 911.

-- Martin Thompson (mthom1927@aol.com), September 19, 2000.

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