The Facts Are Against Any Panic : Why Iraq’s aggression has not led to a significant shortage

The world’s most advanced countries find themselves in the comfortable position of holding bigger oil stocks today than they held a year ago, despite the embargo on Iraq and Kuwait that has kept 4.3 million barrels a day off the market. On Oct. 1, 1989, the 24 countries of the Organization for Economic Cooperation and Development held stocks equal to 92 days of consumption. Now they have enough to last 95 days. It’s a nice irony: The big industrialized countries are more oil-secure now than they were before the Persian Gulf crisis exploded nine weeks ago.

One reason is that the doubling of oil prices that has taken place since Aug. 2 has pushed OECD demand down by about 400,000 barrels a day. At the same time, other producers have raised output to compensate for what has been lost because of the embargo on Iraq and Kuwait. OPEC’s 11 other members, according to the International Energy Agency, increased production by 3.5 million barrels a day in September. The agency projects that oil demand should be flat through the first half of next year.

All this will still leave a world oil shortfall of 1 million to 1.5 million barrels a day, an unwanted but hardly crippling deficit that should easily be taken care of by some modest conservation efforts and dipping into stocks. The message, once again, is that Iraq’s aggression has not led to any significant oil shortage. The gulf crisis isn’t over yet, but there seems to be a good chance that by the time it does end some oil speculators might find themselves hurting badly.