PRICE PARANOIA

KUWAITI OIL PRODUCTION has been crippled and a boycott of Iraqi oil remains. Yet six non-gulf members of OPEC, the Organization for Oil Exporting Countries, are pressuring Saudi Arabia and the United Arab Emirates to cut production to bolster oil prices.

War or not, oil-exporting countries like Libya fear a repeat of the 1986 oil market crash, when prices fell below $7 a barrel. Some proponents of cuts say they believe that Iraq could begin producing in the second quarter and send crude prices crashing below $12 a barrel. Even if the boycott were lifted, it's not likely that Iraqi production could resume quickly enough to create a crash.Non-gulf nations really worry that the Saudis will take advantage of the production gap - they already have increased output by nearly 60 percent to make up for lost output. That's dangerous when world demand is low, they argue. Yet propping oil prices up at $21 a barrel through production cuts won't do anything to increase world demand.

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