The price of oil climbed above 34 dollars a barrel in London on Monday for the first time since the OPEC meeting on September 10 amid tension between Iraq and Kuwait. The price of benchmark Brent North Sea crude oil climbed to 34.12 dollars, against 33.80 dollars at the opening and 33.88 dollars at the close on Friday.
Analysts said that the possibility that Iraq would cease pumping oil in protest of a territorial dispute with Kuwait was partly responsible for the surge in oil prices, and that weak trading amplified the spike.
Furthermore, prospects appeared to be fading that America would intervene to bring prices down.
At Salomon Smith Barney, Peter Gignoux said: "The market had anticipated the opening of strategic reserves, which did not happen."
Relations between Iraq and Kuwait were soured on Thursday after Iraq accused its neighbour of stealing oil from two fields close to its border, the cause of the Iraqi invasion of Kuwait in 1990.
Analysts said that although they believed Iraq was unlikely to invade Kuwait given the US presence there, the threat it would halt production in protest posed a real risk.
The Organisation of Petroleum Exporting Countries (OPEC), which includes both Iraq and Kuwait, has promised to increase production by 800,000 barrels a day from Oct 1, and by more if necessary, but analysts remain unsure whether the commitment will be sufficient to cool an overheating market.—AFP.
©--Agence France Presse.