Oil futures reach highest level since 2000

news.ft.com By Kevin Morrison and Adrienne Roberts Published: January 14 2003 20:01 | Last Updated: January 14 2003 21:09

Oil futures prices in London hit their highest since October 2000 after United Nations weapons inspectors said they had proof of weapons-related smuggling.

IPE Brent crude jumped by about $1 to $31.25 after Hans Blix, the chief UN weapons inspector, said in a BBC interview late on Monday that his teams had found evidence of Iraqi smuggling in violation of UN resolutions.

Comments by Jack Straw, UK foreign secretary, that war on Iraq might not need a new UN resolution, added to the oil price momentum.

Late in London Brent was up 41 cents at $30.61 a barrel. By the close in New York, February WTI was 11 cents higher at $32.37 after an earlier high of $32.90.

Nickel prices hit their highest in more than two years on fears that mine closures might cause supply shortages.

The base metal's price rose to $8,105 a tonne in early trade on the London Metal Exchange, a point not seen since October 2000, but slipped back to end at $7,920, compared with Monday's close of $8,010.

The nickel price rose more than 30 per cent last year, compared with gold's 24 per cent jump.

Political instability in both Zimbabwe and Venezuela is seen having an impact on potential nickel production.

Anglo American has warned that it may close its nickel operations in Zimbabwe after export earnings were slashed following the government's harsh 2003 budget measures.

Canadian miner Falconbridge has said the lack of crude oil due to the Venezuelan oil workers' strike has caused it to cut back production at its nickel plant on the Caribbean island Dominican Republic.

The Venezuelan strike has also affected output at Anglo American's nickel mine Lomo de Niquel.

There are concerns over the timing of new nickel mines coming on stream.

"There has been talk that we could see a situation where existing supply is tight and there is no new supply for some time," said Jim Lennon, base metals analyst at Macquarie Bank.

"And that could provide the grounds for a repeat of the price run in 1988/89 when it hit $13,000 a tonne," he added.