U.S. Oil Price Hits 2-year High on Worries About Iraq, Venezuela

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Last updated at: (Beijing Time) Tuesday, December 24, 2002

U.S. Oil Price Hits 2-year High on Worries About Iraq, Venezuela

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U.S. oil prices shot to their highest level in two years Monday as a freeze in supplies from strikebound Venezuela and the growing threat of war with Iraq deepened fears of a winter oil supply shortage.

February crude on the New York Mercantile Exchange jumped $1.45 a barrel, or 5% in regular hours to $31.75 a barrel. Prices rose in after-hours trade to hit a $32.00 a barrel peak, its highest since January 2001.

Brent crude oil futures in London climbed $1.38 to $29.721 a barrel.

Oil prices have risen 60% this year, jumping $7 in just the last month, heightening concern that higher energy costs could endanger a fragile economy.

New York heating oil prices also surged to two-year highs above 90 cents a gallon on concerns of a shortfall during peak winter demand. Gasoline hit its highest level in 18 months.

Monday's price surge came after the United States continued to criticize Iraq's response to weapons inspectors.

Fears of U.S.-led military conflict rose further after a Pentagon spokesman said a U.S. military unmanned Predator spy plane was presumed lost after being fired on by an Iraqi aircraft in the southern no-fly zone of Iraq.

It was the first downing of a U.S. aircraft in the no-fly zone since a new U.N. disarmament resolution was passed in November.

A briefing by U.N. arms inspectors to the United Nations Security Council on Jan. 27 is widely seen as the next key date that could trigger an attack.

Iraq exports roughly 2 million barrels a day of crude oil, and is the sixth-biggest supplier to the United States.

Oil supplies have already tightened for the Northern Hemisphere winter as a 22-day Venezuelan general strike crippled output from the world's No. 5 oil exporter.

U.S. refinery operations have begun to feel the pinch of the lack of crude oil coming from Venezuela, which normally supplies 14% of U.S. crude and refined product imports.

Source: Agencies

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