Oil prices rise as supplies dwindle

www.channel4.com Published: 13-Mar-03; 08:02 By: ITN

Oil prices have jumped more than a dollar as the US reported a fresh fall in fuel stocks, leaving little supply cover for looming war in Iraq.

US April light crude futures climbed $1.11 to $37.83 a barrel, below its recent peak of $39.99. Oil prices set a record high of $41.15 a barrel during the 1990-91 Gulf crisis.

In London benchmark Brent futures rose 62 cents to $33.91 a barrel.

Oil prices are up 20 per cent this year on concerns that a war in Iraq could upset oil supplies from the Middle East.

Prices eased briefly yesterday after the Organisation of the Petroleum Exporting Countries (OPEC), which controls over half of world crude exports, pledged in Vienna to ensure adequate supplies for nervous oil markets.

Saudi Arabia has raised production sharply since the start of the year to make up for supplies lost from Venezuela during a two-month workers' strike.

But the International Energy Agency, adviser on energy to 26 industrialised nations, said OPEC's spare oil production capacity had been squeezed to just 900,000 bpd following the recent production increases.

"This is less than the potential loss of supply in the event of war in Iraq," said the Paris-based IEA in its monthly Oil Market Report.

Iraqi output, running at 1.7 million bpd over the past month, would be expected to be halted in the event of war. In addition, Kuwait has said it might need to suspend as much as 700,000 bpd as a precaution.

"The market is heading into a period of heightened uncertainty with low stocks and limited spare production and shipping capacity. A further supply disruption would tax a system operating at close to capacity," the IEA said.