Oil prices have climbed sharply, gaining nearly 4 per cent, as US war drums quickened and a supply-sapping strike in Venezuela entered its fourth week.
Indications from Washington and London over the weekend that the prospect of a war on Iraq, the world's eighth largest exporter, was increasingly likely early next year, sent prices higher.
Brent crude oil futures in late-afternoon London trade rose $1.08 cents to $29.42 (€28.74). US crude futures on the New York Mercantile Exchange jumped $1.13 to $31.43 a barrel, a 22-month high.
Dealers fear that an attack on Iraq could coincide with an extended stoppage in Venezuelan supplies, pushing spare output capacity held by other OPEC producers to the limit.
Iraq exports roughly two million barrels a day of crude oil, and is the sixth largest supplier to the United States. Government attempts to break a three-week-old strike in Venezuela appear to have failed, and Caracas is seeking to import fuel to ease shortages in what was the world's fifth-largest exporter.
OPEC exporters have sought to contain prices by pledging to fill any supply gap left by the Venezuelan outage or a war on Iraq.
Cartel ministers said at the weekend they saw no signs of any real shortage on world markets yet, but most want to partially reverse a recently agreed output curb if prices stay high.
OPEC, which pumps about two-thirds of world exports, has sufficient spare capacity to replace either Venezuelan or Iraqi exports.
But analysts said the unlikely scenario of a simultaneous halt in both countries would test the cartel's spare capacity, held mostly by Saudi. - (Reuters)
