Oil futures up on war talk

news.ft.com By Adrienne Roberts Published: January 28 2003 19:45 | Last Updated: January 28 2003 21:47

Crude oil futures edged higher Tuesday after Iraq threatened possible retaliation against oil producer Kuwait in the event of a war.

The market was also waiting for President George W Bush's annual State of the Union address to Congress, in which he was expected to step up the pressure for war.

In London IPE March Brent was 41 cents up at $30.27 a barrel. By the close in New York Nymex WTI was 38 cents up at $32.67 a barrel.

Oil futures traded strongly higher earlier on comments by Iraqi deputy prime minister Tareq Aziz, who said: "Kuwait is a battlefield and American troops are in Kuwait and preparing themselves to attack Iraq. If there will be an attack from Kuwait, I cannot say that we will not retaliate."

There was uncertainty about the status of Venezuela's strike, now in its eighth week. On Tuesday an opposition oil industry report said the country's output had topped 1m barrels a day - a third of normal production - for the first time since the strike began. But there was no sign that rebel oil workers were about to end the strike.

Global coffee supply could fall short of demand in 2003 by 5m 60-kg bags or more, the International Coffee Organisation said in a report.

The 2003/04 Brazilian harvest, expected to be much smaller than the current crop due to drought stress and the biennial off-cycle of trees, was key to this shortfall, it said.

Analysts expected this shortfall to dent the world's large coffee stocks, which the ICO estimated at 32.8m bags at the beginning of the 2002/03 season.

The ICO said the deficit would be the first since the 1997/98 season.