Saudi Arabia and the IEA Reach Agreement on Oil Reserves

Saudi Arabia and the International Energy Agency have agreed that OPEC should use its reserve output capacity in case of a war with Iraq before consumer countries begin using their emergency petroleum reserves. "The IEA agrees with the point of view that some OPEC countries have put forth which says it is best to use the surplus capacity before using the strategic reserves of consumer countries," Saudi Oil Minister Ali al-Naimi said in a statement after meeting with IEA Chief Claude Mandil in Riyadh.

"OPEC, and the kingdom in particular, are concerned with compensating for any shortage in oil supplies in case there is a production or export halt from one or some of the members for any reason." If the OPEC has insufficient reserves, consumer countries represented by the IEA have said they will release emergency stockpiles for the first time since the 1991 Gulf War. The agency says it will take a decision swiftly if war breaks out on Iraq, the world's eighth biggest oil exporter. With only Saudi Arabia holding substantial spare volume, Riyadh will have a key role in determining how many extra barrels are released into world markets.

The 11-member cartel is likely at its March 11 meeting to consider a Saudi-backed plan to suspend production quotas should hostilities start.