Iraq pushes oil prices to 10-year high By Robert Corzine Published: September 18 2000 19:24GMT | Last Updated: September 18 2000 23:05GMT

Oil prices surged to fresh 10-year highs on Monday after President Saddam Hussein of Iraq warned fellow oil exporters not to bow to pressure from "superpowers" to lower petroleum prices.

In morning trading in New York the Nymex October oil futures contract soared $1.18 to $37.10 a barrel - the highest level since October 1990, when Iraq was occupying Kuwait.

Until Sunday Mr Saddam had been silent on the latest surge in oil prices. But his comments rattled nervous oil markets, which have long been fearful that Iraq might use its growing importance as an oil supplier to the West asa weapon to gain political concessions.

Petroleum industry experts say that any lengthy disruption of Iraqi exports at a time when world oil inventories are at unusually low levels would put fresh strains on supplies.

It would probably force the release of the Strategic Petroleum Reserve in the US and require Saudi Arabia - the main US ally in the Gulf - to bring all of its spare production capacity on stream.

In recent years oil markets have reacted strongly to rumours or reports that Iraq might use its 3m barrels a day of production as a way to further its political goals.

The markets were unsettled last week when Iraq accused neighbouring Kuwait of stealing Iraqi oil from fields straddling their border. A similar claim was made just before Mr Saddam ordered the August 1990 invasion of Iraq.

Experts on Iraq said that although Mr Saddam made no direct threat, it was significant that he chose to speak personally about the oil situation rather than leave it to his ministers as he usually does.

"You have to take it seriously when he speaks directly," said Raad Alkadiri of the Petroleum Finance Company, an energy consultancy in Washington DC. He said Mr Saddam's comments were evidence not only that the Iraqi leader "likes high oil prices, but that he is incredibly frustrated at the lack of any political movement to end more than 10 years of sanctions".

Meanwhile in London, the first meeting of a new government taskforce, charged with preventing another fuel crisis, broke up without agreement on how companies will keep fuel tankers running if the protests are repeated.

However, oil industry representatives agreed to meet again today to consider a voluntary "memo of understanding" on their responsibilities during a dispute. They also promised to take a more "robust" stance with their drivers in future.

Jack Straw, home secretary and chairman of the task force, said he was still considering legislation to bring the oil sector into line with the electricity, gas and water industries, which are legally bound to maintain supplies.

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-- Martin Thompson (mthom1927@aol.com), September 18, 2000

Answers

Saddam could easily do it again. Last December he shut off all Iraq imports for three weeks. Remember?

-- Chance (frutloops@hotmail.com), September 18, 2000.