Tuesday, April 09, 2002

Iraq, Venezuela help oil prices to climb

The Associated Press

        LONDON — Oil prices surged Monday in a fresh wave of anxiety after Iraq cut off crude exports to demonstrate support for the Palestinians in their struggle with Israel.

        At the same time, labor strife in Venezuela squeezed that country's oil shipments to a trickle. The combined effect of the supply interruptions added to existing concerns stoked by tensions in the Middle East, home to two-thirds of the world's proven oil reserves.

        Crude futures prices spiked as much as $1.44 a barrel, or 6 percent, in London, and $1.02 in New York.

        On the New York Mercantile Exchange, contracts of light, sweet crude for May delivery jumped to $27.23 before easing back to $26.55 a barrel, up 34 cents from Friday.

        Some energy analysts played down the risk that major, long-term supply disruptions might result. Analysts suggested other members of the Organization of Petroleum Exporting Countries, which pumps a third of all crude, would intervene to offset a major shortfall in supplies.

        Leaders of the oil producers' group expressed alarm at the lat est developments.

        “After the announcement of Iraq to suspend exports and the effect of Venezuela's exports, we could go directly to an oil crisis,” OPEC Secretary-general Ali Rodriguez told Venezuela's Radio Caracas Radio in an interview from Qatar.

        Iraq and Venezuela jointly export about 4.5 million barrels a day, or about 6 percent of global supplies.

        President Saddam Hussein announced that Iraq would suspend oil exports starting Monday for 30 days or until Israel withdraws from Palestinian territories. His unilateral cutoff could put more pressure on other Arab leaders to move against Israel in retaliation for its offensive.

        Iranian supreme leader Ayatollah Ali Khamenei on Friday urged Islamic countries to stop shipping oil for one month to countries with close relations with Israel. Libya announced Monday that it supported the call. Both nations also are members of OPEC.

        Although OPEC hadn't received formal confirmation from Iraq about its embargo, U.N. oil monitors noted that the transfer of oil from Iraq to the Ceyhan loading terminal in Turkey ceased at midmorning Monday, U.N. spokesman Fred Eckhard said in New York.

        At Iraq's other loading terminal, Mina al-Bakr in the Gulf, one vessel completed loading on Monday and two other vessels were waiting to be loaded. It wasn't clear if they would take on their oil cargo, Mr. Eckhard said.


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