War worries drive oil prices higher
LONDON: Oil prices gushed higher in early trading here on Monday as war worries escalated at the start of a crucial week in the Iraq crisis and efforts by OPEC energy ministers to try to calm the market fell on deaf ears. The price of benchmark Brent North Sea crude oil for April delivery climbed to $34.32 per barrel from $34.10 at the close of the previous session. In New York, the reference light sweet crude April-dated futures contract shot up 78 cents to $37.78 a barrel on Friday. Prices resumed their upswing as the UN Security Council prepared to debate a vote on a US-British resolution giving Baghdad until March 17 to disarm or face war, as France wooed opposition among African states. Washington warned it could launch strikes before next Monday’s deadline if the United Nations rejected the resolution. “It looks as if it could be a very strong week for crudes and the products as war fears mount,” said GNI-Man Financial analyst Lawrence Eagles “Iraq will continue to dominate market talk, especially as it would appear as if the US will have to go to war without a UN mandate,” he added. Jittery oil traders found little solace in remarks from oil ministers attending a meeting of the Organisation of Petroleum Exporting Countries (OPEC) in Vienna to discuss production quotas. Venezuela and Algeria, two members of the 11-strong cartel, said they believed OPEC had enough room for manoeuvre to avoid a supply shortage in the event of war. But UAE oil minister Obaid Al-Nasseri said it would be difficult for the oil cartel to increase production as it is already at almost full capacity, a concern shared by analysts. Eagles said of the OPEC ministers, “Politically they are important but in practical terms few observers believe that there is any significant spare capacity outside of Saudi Arabia.” —AFP OPEC split on plans to suspend production ceilings during war VIENNA/TEHRAN: Iran on Monday said it opposed a bid by Western-friendly OPEC states to suspend output limits should the US launch an attack on Iraq, fuelling fears of a further spike in the price of oil. Leading cartel power Saudi Arabia is hoping to get backing at a Tuesday meeting of the Organisation of the Petroleum Exporting Countries to set aside production quotas if war stops Iraqi exports. Riyadh also is trying to convince importing nations there is no need for a release, in the event of war, from their emergency strategic stockpiles. But Saudi faces stern opposition from Iran for a plan that Tehran says implies support for a US attack by controlling oil prices. “Iran will not back politically motivated decisions,” Iranian Oil Minister Bijan Zanganeh told the official IRNA news agency. OPEC should refrain from taking decisions which would imply support for a “US military assault against one of OPEC’s member states,” Zanganeh said. US light crude futures rose 29 cents to $38.07 a barrel, approaching 1990 Gulf War record highs of $41. “This is a perfect opportunity for OPEC to prove that it is a friend to the world community,” said Peter Gignoux, head of the energy desk at Salomon Schroder Smith Barney in London. —Reuters