War fears push oil prices

www.gulf-daily-news.com LONDON:

World oil prices set new two-year highs yesterday for fear of war in Iraq and then eased as cracks started to appear in a Venezuelan strike that has cut deep into exports to the US.

US light crude at 1745 GMT was down 21 cents at $34.61 a barrel after setting a fresh high of $35.20 in early electronic trade. London Brent blend eased 39 cents to $30.73 a barrel. President George W Bush said it was now clear to him that Iraqi leader Saddam Hussein was failing to comply with UN disarmament demands.

Oil dealers said the remarks appeared to leave little doubt that Washington was now close to authorising the use of military force against Baghdad.

But early price rises were contained by news from Venezuela that tanker pilots in Lake Maracaibo, a strategic export route, had ended their part in the seven-week-old nationwide strike.

"This is something that helps Chavez. A prerequisite to restart production is to get exports going, so this is a step in the right direction," said George Beranek of Washington's Petroleum Finance Company.

World oil markets have yet to respond to an Opec decision to boost output and the organisation could therefore agree to a further production hike when it convenes March 11, Opec President Abdullah bin Hamad Al Attiyah said yesterday.