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Oil surges back above $27 after Iraq suspends all exports for month

Philip Thornton
Tuesday 09 April 2002 00:00 BST
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The price of crude oil surged more than 5 per cent yesterday after Iraq suspended all exports for a month in response to Israeli military action in the West Bank.

The news came as Venezuela's government sacked seven senior oil executives amid protests that have brought exports from the world's fourth-largest producer to a standstill.

The price of a barrel of Brent crude jumped as much as $1.44, or 5.5 per cent, to $27.43 a barrel on the International Petroleum Exchange in London.

The Iraqi leader, Saddam Hussein, said oil exports had been suspended for a month or until Israel withdrew unconditionally from Palestinian territories.

Iran, the second-largest producer in the region, said it would be willing to cut oil exports to countries that backed Israel if its Arab neighbours agreed. Libya immediately backed the move.

Ali Rodriguez, secretary general of the oil producers' cartel Opec, said he would consult with fellow oil ministers today, adding that they could hold an emergency meeting to decide policy.

"After the announcement of Iraq to suspend exports and the effect of Venezuela's exports, we could go directly to an oil crisis," he warned.

Michael Rothman, a senior energy market specialist at Merrill Lynch, said there was enough spare capacity in the world to off-set the Iraqi embargo. "The decision is likely to garner a reaction from Opec given the evident concerns about a rise in oil price potentially damaging the global economic rebound," he said.

The International Energy Agency, which represents the mainly Western nations, said it was ready to make oil available to meet any shortage on world markets. During the Gulf War the IEA made 2.5 million barrels a day available ­ slightly more than the 2 million barrels that Iraq currently exports.

Rising oil prices are likely to put more pressure on the petrol companies to raise prices.

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