Indonesia rejects proposed oil embargo against U.S.
Indonesia rejects proposed oil embargo against U.S.
A'an Suryana The Jakarta Post Singapore
Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Friday Indonesia would reject any attempt to use oil as a "weapon" to prevent a possible war in Iraq, an issue which came up during an informal meeting of the Organization of the Islamic Conference (OIC) in Kuala Lumpur this week.
"Such a move would be difficult to carry out," Purnomo said after inspecting an Indonesian oil and gas drilling rig being built for PT Apexindo Pratama Duta in Singapore.
He said the members of the Organization of Petroleum Exporting Countries (OPEC), most of whom also are members of the OIC, only represented some 40 percent the world's oil producers.
He said other oil producers could boost their supplies in the international market to fill any gap caused by an oil embargo against the U.S. and its allies.
He added that an embargo also would be costly and jack up oil prices, which in turn would negatively affect OIC members who are oil importers.
The remarks come in the wake of Wednesday's call by Malaysian Prime Minister Mahathir Mohamad for Muslim states to at least consider using oil prices as a "weapon" to force a peaceful resolution to the Iraq crisis.
Meanwhile, when asked if the government would impose a price cap on domestic fuel prices to avoid short-term shock in the wake of a possible war in Iraq, Purnomo said such measures were unlikely.
A war in Iraq would disrupt oil exports in the international market, and thus could boost oil prices. As a consequence, the price of fuel in Indonesia could also jump.
But Purnomo said this scenario was unlikely because Saudi Arabia and other countries would increase their supplies if the Iraqi oil supply was interrupted by war.
Separately, the Financial Times quoted Saudi Arabia's oil minister as saying the country could pump an extra 2.5 million barrels of crude oil a day if a Gulf war interrupted Iraq's exports.
Minister Ali al-Nuaimi said his country was currently producing no more than between 8.0 million and 8.1 million barrels per day against its 10.5 million barrel per day capacity.
But al-Nuaimi scoffed at suggestions that output curbs by members of OPEC had contributed to the recent rise in oil prices, which on Thursday surged to their highest level in more than 12 years in New York.
"Current inflated prices have nothing to do with a shortage of supply, but everything to do with the uncertainty arising out of a possible war and its consequences," al-Nuaimi was quoted as saying.
Many analysts believe the kingdom's current output is probably closer to nine million barrels of oil per day.