Crude hits two-year high as war fears increase
news.ft.com By Gordon Smith in London Published: January 21 2003 12:18 | Last Updated: January 21 2003 12:18
Crude futures rose sharply in London on Tuesday as concerns over the stability of the Middle East rose after a US citizen was shot dead in Kuwait in a suspected terrorist attack and US and UK troop deployments to the region increased war fears.
The IPE March Brent contract rose 50 cents to $31.21 while the US crude hit a two-year high of $34.50 in electronic trade. On Monday US markets were closed for Martin Luther King day.
Earlier the US confirmed a civilian contractor working on a US military base in Kuwait had been shot dead and another wounded in what it said was a terrorist attack.
The killing came as tension in the Gulf mounted after the British government announced it was committing 30,000 troops to the region. The news came ahead of the interim report from Hans Blix, the UN's chief weapons inspector, to the UN security council next week.
Oil traders remain concerned that any conflict in the Gulf will coincide with the ongoing strike in Venezuela and restrict supplies even further.
The Venezuelan strike, in its 51st day, showed no signs of ending as the battle between supporters of the Chavez government and the strikers intensified.
On Sunday president Hugo Chavez said he was "winning the war on oil" and that oil output had risen to 1.2m barrels per day. But striking workers claimed the actual output was at only half of the president's claimed levels.
The strike has slashed Venezuelan output by about 80 per cent from its pre-strike levels of between 2.5m and 3m barrels per day.
The gold spot price drifted lower ahead of the reopening of trade in the US. The precious metal fixed at $355.20 in morning trade on the London Metal Exchange, down from the previous session's fix of $355.85.
Gold remained close to recent highs however as worries about possible war in the Gulf persisted and the dollar, which traditionally has an inverse relationship with gold, traded just above multi-year lows against other leading currencies.