http://www.reuters.co.il/news2000/N2S8IG40.HTM
| UPDATE 3 - Oil soars on export halt by Iraq and Venezuela |
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(Updates price in paragraph 2)
By Tom Ashby
LONDON, April 8 (Reuters) - World oil prices soared on
Monday when Iraq announced an immediate suspension of oil
exports in protest at Israel's incursion into Palestinian
controlled areas of the West Bank.
The news prompted a frenzy of buying by traders already
spooked by a halt in shipments from the world's No. 4 oil
exporter Venezuela.
International benchmark Brent crude oil jumped $1.28 to
$27.27 per barrel by mid-afternoon in London, resuming an
assault on a six-month high of $28.15 seen last week.
U.S. crude futures rose 99 cents to $27.20.
Iraqi leader Saddam Hussein said all oil exports were
suspended from Monday for a month or until Israel withdrew
unconditionally.
Sanctions-bound Iraq is the sixth largest oil supplier to
the United States, and its two million barrels a day of exports
account for four percent of oil traded worldwide.
Israeli Prime Minister Ariel Sharon vowed to press ahead
with its sweeping military offensive in defiance of U.S. demands
for a withdrawal.
Venezuelan shipments to the world market were at a
standstill on Monday after halting over the weekend, and
refineries reduced their processing rates.
State oil company executives in Latin America's top oil
exporter, another key supplier to the United States, are
protesting the government's choice of a new board of directors.
"I'm surprised markets have taken this so calmly," said Paul
Horsnell of investment bank J.P. Morgan.
"Certainly there is potential for spike up to $30."
Prospects of higher energy costs also hit global equities
markets, as traders fear damage to the world economic recovery.
But oil company shares bucked the trend, rising sharply.
U.S. Energy Secretary Spencer Abraham said the U.S. economy
and national security were vulnerable to the Iraqi export halt.
OPEC Secretary-General Ali Rodriguez said he will consult
with cartel oil ministers on Tuesday and the group could hold an
emergency meeting to decide policy.
The Arab dominated cartel controls two-thirds of world oil
exports and could easily replace lost Iraqi and Venezuelan
barrels after cutting five million barrels of daily production
since January last year.
EMBARGO CALL
Saddam has already called on other Arab producers to embargo
the West for its support of Israel, and Libya and Iran have
backed the call.
However, OPEC heavyweights Saudi Arabia and Kuwait have both
said they would not join any Iraqi stoppage.
Both these countries rely heavily on the United States for
their defence.
Oil market traders said as many as 25 empty oil tankers were
at Venezuelan ports waiting to load, and one source said
production was already cut by 40 percent.
Venezuela supplies about 15 percent of U.S. oil imports.
Latest U.S. government data shows it accounted for about 1.4
million barrels per day of crude imports and another 300,000 bpd
of refined products such as gasoline and diesel.
President Hugo Chavez announced the sacking of seven
dissidents from the state oil company on Sunday, labelling them
"saboteurs."
The Organisation of the Petroleum Exporting Countries has
cut production by five million bpd since January 2001 to buoy
prices, and in March agreed to extend output restrictions until
at least its next meeting in June.
Russia and Norway, which both agreed to join OPEC in crude
supply curbs, said on Monday it was too early to reconsider the
policy now.
((London newsroom +44 20 7542-8185, fax +44 20 7542 4453,
london.energy.desk@reuters.com))
08 APR 2002 14:50:16
UPDATE 3-Oil soars on export halt by Iraq and Venezuela