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Gulf war fears hike the oil price Jane Padgham, Evening Standard 15 September 2000
ust when it looked as if the fuel crisis was drawing to a close, political tension between Kuwait and Iraq has driven the price of crude oil higher again. Following an over-night surge in US crude, Brent crude futures* on London's International Petroleum Exchange jumped 63 cents to stand at $32.92 a barrel.
The latest rally was triggered by Iraqi accusations that Kuwait was stealing oil from its fields. Although Kuwait has vehemently denied the allegations, there have been reports of Iraqi jets flying over the Kuwaiti border. Baghdad made similar oil-theft claims before marching into Kuwait in 1990, a move that led to the Gulf War.
If that was not enough, there were also reports of a possible hurricane in the southern Gulf of Mexico, the source of 20% of US domestic oil production.
Rob Laughlin, an oil analyst at GNI, said: 'Concerns over warmongering have driven the latest rise. When you're in the kind of situation we've been in for the past few weeks, this is the last thing that you need. Prices are likely to remain firm and climb even higher during the course of the day.'
On foreign exchanges, the euro slid back towards 86 cents after figures showing the first drop in the US consumer price index for 14 years boosted the dollar. The CPI index ticked 0.1% lower. The core rate nudged 0.2% higher. Sterling was little changed at $1.4060.
-- Martin Thompson (email@example.com), September 15, 2000
Friday, 15 September, 2000, 13:20 GMT 14:20 UK Gulf tension fuels oil price rise
Kuwaiti oil depots were destroyed during the Gulf war
By economics correspondent Andrew Walker World oil prices have risen again, this time following increased political tension in the Middle East.
In early London trading, Brent crude was about 60 cents higher at just under $33 a barrel.
Kuwait says Iraq has been trying to plunge the region into a new conflict. Iraq has accused Kuwait of stealing oil from two fields close to their joint border, but Kuwait says the oil fields are within its territory.
The world oil market is in a nervous state with stocks of oil products, notably petrol, diesel and heating oil, very low.
Heating fuel fears
There are real concerns about the possibility of shortages of heating fuel if the coming winter in the northern hemisphere turns out to be unusually cold.
Last week prices hit their highest level since the Gulf crisis 10 years ago. Then, the problem was the sudden loss of supply from two major producers, when Iraq invaded Kuwait.
With prices already high, any sign of renewed tension in the region makes traders uneasy.
There is also an underlying longer term concern in the market about Iraq's attitude to United Nations sanctions. Under a UN deal, it is allowed to export a certain amount of oil and use the revenue to pay reparations to Kuwait and to buy food and medicines for Iraq.
Baghdad is not happy with the deal, and it could maximise its bargaining power during the coming months by threatening to withhold oil.
This would be a substantial threat. Iraq is now producing around three million barrels a day of crude oil. That makes it the third biggest supplier in OPEC, the 11-member oil producers' cartel.
Iraqi production is roughly the same as the total increases that OPEC has agreed over the course of the year in an attempt to meet demand and bring prices down.
If, in the middle of the northern winter, Iraq were to withhold its oil supplies - or even hint at it - that could have a dramatic effect on the market.
-- Martin Thompson (firstname.lastname@example.org), September 15, 2000.
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U.S. says it is ready to use force against Iraq By Jonathan Wright Click to enlarge photo
UNITED NATIONS (Reuters) - The United States warned Iraq on Thursday it stood ready to use military force if Baghdad threatens its neighbours, after Iraq accused Kuwait of stealing its oil and an Iraqi jet violated Saudi air space.
"We do have a credible force in the region and are prepared to use it in an appropriate way at a time of our choosing," Secretary of State Madeleine Albright told a news conference.
She said the U.S. military option came into play "if there are attacks or provocations against the Kurds in the north, if there are threats against the neighbours and against our forces or a reconstitution of the weapons of mass destruction."
Albright, speaking on the sidelines of the U.N. General Assembly in New York, was sceptical of the Iraqi allegation against Kuwait and said the United States disapproved of Russian plans to start civilian flights into Baghdad.
"After almost 10 years of dealing with this issue, I genuinely have trouble believing one word out of the mouth of any Iraqi," she said. A senior aide said she was referring to Iraqi officials, not to Iraqis in general.
A State Department official said earlier on Thursday that an Iraqi military plane flew briefly over Saudi Arabia last week in an incursion Washington saw as a possible attempt to create a crisis during the U.N. Millennium Summit in New York.
"One question that people have is whether these overflights have not been carefully orchestrated in order to create a confrontational atmosphere during the Millennium Summit and during the General Assembly," Albright said.
The New York Times on Thursday said the September 4 incursion over Saudi Arabia was the first in nearly a decade.
A Pentagon spokesman would say only that Iraqi planes entered the southern "no-fly" zone that day, and that British and American planes which patrol that area did not respond because they were not flying at the time.
OLD COMPLAINT AGAINST KUWAIT
But on Thursday, the allied planes bombed a radar site in southern Iraq because of "a series of provocations" over the past several days including Iraq firing surface-to-air missiles, Pentagon spokesman Rear Admiral Craig Quigley said.
Iraq sparked concern in the international community on Thursday when it resurrected an old complaint against Kuwait, saying it would take unspecified measures to stop what it called sabotage and theft of Baghdad's oil.
"Iraq will take suitable measures which will guarantee its and the Arab nations' rights to control its oil wealth and employ it for the interest of the whole Arab nation rather than achieve vicious American policy," Iraqi Oil Minister Amir Muhammed Rasheed said, according to the Iraqi News Agency.
Kuwaiti Foreign Minister Sheik Sabah al-Ahmad al-Sabah denied the allegation. "We haven't stolen anything. If you take from your own land it can't be stealing," he told Reuters.
The United States is watching Iraq closely but at the moment there did not appear to be any troop movements that appeared out of the ordinary, Quigley said.
"This is a time of year that we pay particular attention to what is going on inside Iraq," he said.
It is typically at the end of Iraq's military training cycle when Baghdad tends to become more aggressive, U.S. defence officials said, noting the August 1990 invasion of Kuwait.
The United States was watching for Iraqi military activity that appeared "larger, longer lasting ... that might prove to be an indicator of potential hostile action against either a neighbouring nation or against his (Saddam's) own people in the north or the south," he said.
RUSSIAN FLIGHTS "NOT A GOOD IDEA"
"So far we have not seen an indication that is out of character of the sort of activity that you would see this time of year in conjunction with their normal training cycle, we'll continue to watch very carefully," he added.
Asked about Russian plans to start an air service to Baghdad, Albright said: "We disagree with those who wish to fly into Iraq and I will make that clear when I see (Russian Foreign Minister Igor) Ivanov in a little while and I don't think it's a good idea."
Commercial flights would erode the U.N. sanctions, which the United States wants to maintain as long as Iraq does not let U.N. inspectors monitor its weapons programs.
On military action, Quigley said: "I think that we have a variety of means at our disposal to take action, if we so choose to do so, against any aggressive acts that Saddam would impose, either on a neighbour or on his people.
Iraq does not recognise the no-fly zones which were established by Western nations after the 1991 Gulf War to protect a Kurdish enclave in the north and Shi'ite Muslims in the south from potential attacks by Iraqi troops.
U.S. and British jets regularly patrol those areas from bases in Saudi Arabia, Kuwait and Turkey.
Iraq has made more than 150 violations of the no-fly zones, mostly in the south, since December 1998 when the United States and Britain bombed Iraq, saying Saddam was obstructing the work of the U.N. weapons inspection agency.
-- Martin Thompson (email@example.com), September 15, 2000.