Few Crude Oil Supply Problems Expected from Persian Gulf War

Article excerpt

NEW YORK - Despite their substantial reliance on oil from countries bordering the Persian Gulf, the world's industrial powers would probably not immediately experience serious supply problems if ships were suddenly unable to carry crude oil through the gulf, experts on the energy industry said Wednesday.

An increasing amount of the oil exported from the region is shipped through pipelines to the Red and Mediterranean seas, the experts pointed out.

In addition, Saudi Arabia, the largest of the Persian Gulf producers, has stockpiled millions of barrels of crude oil in floating storage around the world. It could draw on these stocks to meet short-term demand if a disruption of gulf supplies occurred.

Last winter, the Saudis were said to have about 60 million barrels in floating storage.

However, significant military activity in gulf waters could threaten the region's normal flow of oil if it led to military strikes inside the area's key oil producers: Saudi Arabia, Kuwait and the United Arab Emirates.

The seven-year Iran-Iraq war has been watched by oil experts chiefly because of the fear that it could spread to these key countries and disrupt their oil production, said John H. Lichtblau, president of the Petroleum Industry Research Foundation.

"Absent any major military activity in the gulf," he said, "oil coming out of the gulf won't be threatened'' merely by increased tensions in the area.

Crude supplies from the Persian Gulf had been ``fully adequate'' throughout the Iran-Iraq conflict, Lichtblau said.

In fact, he continued, the reason crude oil prices plunged from nearly $30 a barrel to less than $10 last year was that the problem of the Organization of Petroleum Exporting Countries ``became just the opposite.'' He said.

``There's been too much oil coming out of the gulf in recent years," he said.

The increased use of pipelines also has muted concern about a cutoff of shipping. Although virtually all of Iran's exports are shipped through the Persian Gulf, Iraq sends nearly all of its 1. …