OPEC Warns of Price Collapse

OPEC Secretary General Ali Rodriguez warned Thursday that oil prices will "collapse" if the cartel fails to reach an accommodation with its non-OPEC rivals including Russia to cut production. But he expressed continuing confidence that a deal will be struck by January 1, when OPEC has pledged to cut its output by 1.5 million barrels per day, but only on condition that non-OPEC producers cut by 500,000 bpd.

"Prices will collapse" Rodriguez stated. "But I am convinced we will not arrive at that situation and that we will arrive at an agreement." OPEC leaders have warned that prices could slump below 10 dollars a barrel if no deal is struck to rescue oil prices which have already sagged to two-year lows amid the global slowdown deepened by the September 11 attacks.

The head of OPEC reiterated that oil prices would rise if Iraq were targeted in the US-led war against terrorism. "If we face a conflict (in Iraq), we will face a rise" in oil prices, he said, referring to the fear that military action would disrupt oil supplies from the Middle East region.