BEIJING, March 19 (Xinhuanet) -- World oil prices soared to fresh 13-year highs earlier this week with New York light crude futures piercing 38 US dollars a barrel, a situation totally unexpected one year ago.

    During the buildup of the US-led invasion of Iraq last March, oil prices raced to 38 dollars a barrel, the highest since the Gulf crisis in 1990. Later with the fall of the Iraqi capital Baghdad, oil prices began to fall. Many analysts then predicted that oil prices would return to 25 dollars a barrel with the recovery of Iraq's oil exports.

    However, the prices were on the rise instead. In the latter half of 2003, US oil prices once shot to 32 dollars, on fears thata freezing winter in the United States would strain oil inventories already at their lowest level since 1975.

    Analysts here believe one reason behind the high oil prices is the failure of Iraq's oil production. Oil pipelines were destroyednow and then, disrupting production and hurting market confidence.

    So far Iraq's oil output reaches 2.3 million barrels per day, nearing the level before the war. The slow recovery of Iraq's oil exports has prevented the country from playing a positive role in stabilizing oil prices.

    But analysts here also say the most immediate reason for price surges lies in the decisions of production cuts by the Organization of Petroleum Exporting Countries (OPEC), which supplyabout a third of the world's oil.

    Despite high oil prices, OPEC producers worry that their real incomes from oil exports could drop because the US dollar was weakened dramatically against major foreign currencies last year and oil prices are measured in the dollar.

    Therefore OPEC slashed production quotas in September 2003 and February 2004, exerting heavy pressures on world oil markets.

    Meanwhile, fearing the balance between supply and demand would be finally lost with more oil exports from Iraq, OPEC has been reluctant to raise production.

    The United States has staged a faster economic growth since the last six months in 2003. It boosted oil demand and tapped the nation's business oil stockpile to a record low level over the past three decades.

    China, meanwhile, has turned into the world second largest oil consumer with robust economic growth. Crude oil imports to the country have hovered at 91.12 million tons last year.

    Most analysts forecast that global oil market will see a risingdemand as the United States and China are expected to continue increasing oil consumption this year.

    But the market is faced with a danger that if a gap between oilsupply and demand emerges, it will be hard to bridge it as world oil reserves remain at low level and there are no additional crudein the market.

    Under such circumstances, any events which may tighten oil supplies, like recent political turbulence in major oil producer Venezuela, will invite overreaction from traders and drive oil prices up.

    OPEC will hold a ministerial meeting on March 31 to decide whether to carry out the February plan in which oil production quotas will be cut to 23.5 million barrels per day from April 1.

    The oil bloc held that it is necessary to curb output and boostoil prices in the second quarter with the demand ebbing. But market analysts feared that if the demand just slumps to a limitedextent, new output reduction will squeeze the tight oil supplies even further.

    High oil prices will not be helpful to the overall development of world economy. OPEC also stressed that its basic policy is to maintain the stability of oil prices.

    However, the war-swept Iraq becomes a new variable to international oil market. The development of global economy also changed the relations between oil supply and demand continuously.

    As oil prices are always affected by non-business and irrational factors easily, OPEC's abilities of making judgment andcoping with emergency will be tested in the coming few months. Enditem