DUBAI: Oil markets are set for a dramatic upheaval ahead with oil prices hovering around $30, members of the Organization of the Petroleum Exporting Countries (OPEC) cheating on production quotas, Venezuelan oil workers on strike, and a US- Iraq confrontation coming up.

In short, world oil markets face levels of uncertainty never seen before.

Adding to the uncertainty from the expected US-led attack on Iraq is the strike since Dec 2 by workers at the state-owned oil firm in Venezuela, the world’s fifth largest oil exporter, as part of opposition efforts to force President Hugo Chavez to step down.

Meantime, members of the OPEC cartel have been trying to calm the market’s concern about oil, for which global demand this year was at around 76 million barrels per day (bpd), an increase of about 600,000 bpd from 2001.

OPEC nations account for about 50 per cent of the world’s oil reserves and control prices by juggling production and supply levels to keep prices between a mutually agreed reference range of 22-28 US dollars a barrel.

Energy-consuming countries have called for an increase in oil production to bring down prices, but even at the latest meeting on Dec 21, OPEC members have reacted only by raising production quotas.

This only decreases blatant cheating and overproduction by OPEC members, but oil supply would stay on the same level, at around 24 million bpd.

“We want to have no imbalances in the market,” Saudi Oil Minister Ali al-Nuaimi said. But political developments in the region are sending oil markets into a tizzy.

James Varghese, who works for Dragon Oil in Dubai, said, “The Gulf accounts for 65 per cent of the world’s proven oil reserves, and it has always been a seething cauldron of political turmoil.”

“Today, the two critical political flashpoints in the region — the ongoing Israeli-Palestinian conflict and the expected US attack on Iraq — are a cause for great concern, not only for political reasons but also for the effect these could have on oil security,” he said.

If the United States actually attacks Iraq, prices could almost shoot up to $100 a barrel, analysts warn.

Sceptics point to a US interest in gaining control over Iraqi oil as one of the reasons for its war plans.

A new regime would, however, mean that the OPEC cartel would face the danger of a revolt from Iraq, which would prefer to pump at utmost capacity to earn revenues that it has lost out on due to international sanctions rather than stick to the group’s production quotas.—Dawn/The InterPress News Service.