KUALA LUMPUR, Feb. 26 - Malaysia raised the specter on Wednesday of an Islamic oil embargo as a way of exerting pressure on the West to prevent war with Iraq, but officials and analysts said such a tactic was unlikely to be used. Malaysian Prime Minister Mahathir Mohamad told a news conference at the end of a special meeting of Islamic leaders and ministers from 49 countries that no decision had been reached on the idea, long favored by the Malaysian leader.
"There has been a suggestion that we look at using our oil wells in order to exert pressure," he said. "How this can be done is something else, but there is a consensus as to the need for us to think about these things."
Represented among the dozens of presidents, prime ministers and senior officials from the Islamic world were around 20 oil producers, including Saudi Arabia, Iran and Kuwait.
Delegates to the special meeting of the Organization of the Islamic Conference (OIC) have spoken out strongly against plans by the United States and Britain to attack Iraq if it does not surrender weapons of mass destruction that Washington and London say Baghdad has hidden.
They have also called on Iraq to comply with the terms of United Nations resolution 1441 and cooperate fully U.N. weapons inspectors.
Mahathir has suggested in the past that the Muslim world consider using oil as a way of giving it leverage over the West, but he has also conceded that such a strategy could be dangerous.
"Oil is a double-edged sword," Mahathir said. "If (the price of) oil goes up many of the countries of the South are going to suffer... This double-edged weapon may hurt us more than it may hurt the other parties."
OIL MARKET JITTERS
Mahathir's comments will do nothing to calm oil markets already nervous over the possibility of losing output from the Middle East, which supplies 40 percent of global oil trade, in the event of a U.S.-led attack on Iraq.
Dealers fear war with Iraq, the world's eighth largest oil exporter, could slash crude oil shipments to Western markets.
U.S. light crude oil was up 20 cents at $36.26 a barrel at 0710 GMT.
But Saudi Arabia, the world's biggest oil exporter, and other major Islamic producers such as Iran have repeatedly ignored calls to use oil as a weapon, mindful of the consequences of the last attempt to link oil supply with politics.
In the early 1970s, Arab oil producers slapped an oil embargo on the West for supporting Israel, bringing a sharp rise in prices that eventually triggered recession.
It also led to a sharp rise in production by non-Arab oil producers, which forced down oil prices and a sharp decline in income for the members of the Organization of Petroleum Exporting Countries (OPEC).
Iraq suspended some two million barrels per day of exports in April in protest against what it said was U.S. support for Israel. No other producers -- Arab or otherwise -- followed suit.
Also in April, fellow OPEC-member Iran called for an oil embargo on Israel and its allies in support of the Palestinians, but the plea fell on stony ground in the Arab-dominated exporters' cartel.
"The major Islamic producers don't think this is appropriate and prefer to delink politics from oil," a Gulf-based oil analyst said.
Malaysia is a minor oil producer, pumping almost 800,000 barrels per day, roughly a tenth of Saudi output. Its neighbor Indonesia is OPEC's only Asian member.
Mahathir said Islamic states realized meddling with the oil market could cause problems for all countries.
"Of course there were some views that such weapons could rebound and we might have to pay a very high price," he said. "We agreed that we should think about it, not just dismiss it." |
