What Effect Will IRAQ Have On The Energy Markets?
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- 10/03/2001
02/19 20:05
Crude Oil Rises After U.S. - U.K. Forces Bomb Iraqi Air Defenses
By Thomas Tugendhat
Singapore, Feb. 20 (Bloomberg) -- Crude oil rose after a series of U.S. and British bombings on Iraqi air defenses raised concern Baghdad may halt exports in retaliation.
The attacks, the closest to Iraq's capital since raids resumed in December 1998, provoked condemnation from Arab states including Jordan, as well as France, Russia and China. A stoppage of sales from Iraq, the third-largest Middle East producer, would come as winter in the U.S. and Europe spurs oil demand.
``The stakes are high,'' said Bruce Evers, an analyst at Investec Henderson Crosthwaite. ``With a month of winter to go in the Northern Hemisphere, the natural reaction is for prices to rise. It (the bombings) could easily put a dollar on the price.''
Crude oil for March delivery rose as much as 37 cents, or 1.3 percent, to $29.53 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Today is the last day of trading for the March contract. New York trading was closed yesterday for the Presidents' Day holiday.
In London yesterday, Brent crude oil for April settlement rose 42 cents, or 1.6 percent, to $27.31 a barrel on the International Petroleum Exchange, the biggest rise since Feb. 7.
Iraqi exports, normally about 3 percent of world supply, are regulated by the United Nations under sanctions imposed after Baghdad's invasion of Kuwait in 1990. The revenue is used to pay for food, medicine, replacement parts for Iraq's oil industry and reparations for the Persian Gulf War.
``Oil exports are continuing as normal,'' said George Somerwill, UN spokesman in Baghdad. ``It's 100 percent business as usual.''
The bombs hit air defense sites that targeted aircraft patrolling no-fly zones in the country's south and north, the U.S. and U.K. said. The zones are designed to protect Shiites and Kurds.
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