LONDON -- World oil prices have been gyrating today.
Prices rose initially when Ali Rodriguez, OPEC's chief executive, was picked to run Venezuela's national oil company.
But prices fell later in the day when Saudi Arabia gave assurances that it would fill any real market shortage.
Iraqi President Saddam Hussein again called on Arab oil exporters to join Iraq in its embargo on crude shipments to the United States and Israel. But that call fell on deaf ears earlier.
Questions about who would succeed Ali Rodriguez as secretary-general of the Organization of Petroleum Exporting Countries contributed to the volatility.
''The market is nervous. ... There are so many things going on at the same time,'' said Ali Tahghighi, an oil analyst at Barclays Capital.
In London, June contracts of North Sea Brent crude jumped by as much as 54 cents a barrel before slipping to $25.60 a barrel, down 25 cents from Friday's closing price. Contracts of U.S. light, sweet crude rose by 42 cents a barrel, then dropped to $26.04, 34 cents below Friday's close.
The price of crude fell 11 cents to $26.27 per barrel Monday on the New York Mercantile Exchange.
Saudi Arabia's Oil Minister Ali Naimi said OPEC might have to increase production in coming months.
''The question is when do we make the move without destabilizing the market,'' Naimi said at an energy conference in Washington.
OPEC is committed to cover real supply shortages, he said, but added that he sees current oil inventories as ''fairly good.''
Naimi noted that his country has about 3.5 million barrels a day in spare production capacity -- equal to about 5 percent of the world's total output in March and more than enough to make up for the 2.5 million barrels a day that Saddam has held back from the market for the past two weeks.
Naimi refused to specifically address Iraq's cut in oil exports but said that OPEC has rejected Iraq's call for an oil embargo.
His comments were a balm to markets agitated by doubts about Venezuela, the world's fourth-largest oil exporter. Rodriguez, a price hawk, agreed Friday to take over as president of Venezuela's state-owned oil monopoly, Petroleos de Venezuela S.A.
He had come under intense pressure, as a supporter of Venezuelan President Hugo Chavez, to accept the job offer. PDVSA lay at the center of a dispute that flared this month into a bungled coup against Chavez.
Rodriguez, widely seen as a Chavez man, might have little inclination to oppose his boss' established policy of trying to limit Venezuelan crude output in the hope of forcing prices higher.
Oil traders initially began buying crude contracts Monday ''because they see an OPEC hawk going into an OPEC-hawk country,'' said Peter Gignoux, head of the petroleum desk at Salomon Smith Barney.
Gignoux dismissed Iraq as a major problem.
''It's an annoyance more than a crisis at this stage,'' he said.
U.S. Energy Secretary Spencer Abraham seemed to put more stock in what Saudi Arabia's Naimi said in Washington. Speaking at the conference, Abraham said Saudi Arabia's commitment to stable energy supplies showed that oil wouldn't be used as a political weapon during the current Middle East conflict.
Rodriguez's departure from OPEC after just 16 months of a three-year stint left the group's 11 members searching for names of a possible replacement. Rodriguez might remain in his current position until the fall, as the process of nominating candidates could take several months and any successor would require the unanimous approval of all OPEC members.
No candidates have come forward so far.
Saudi Arabia and Iran had arranged informally in 2000 for a Saudi to serve as secretary-general, to be followed immediately by an Iranian. Iraq upset this quiet agreement by proposing its own candidate, and Rodriguez ended up becoming a compromise choice, said an OPEC source, speaking on condition of anonymity.
Iraq's interest in cultivating better ties with Saudi Arabia -- a potential matter of survival for the isolated Saddam -- might lead it to support a Saudi candidate this time around. One likely candidate would be Saudi Arabia's governor to OPEC, Suleiman al-Herbish, said the source, speaking from OPEC headquarters in Vienna, Austria.
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