LONDON, Sept 13: Oil prices rose sharply on Friday, following steep declines the previous session, after Iraq reacted defiantly to US President Bush’s ultimatum for the readmission of UN weapons inspectors.

Reference Brent North Sea crude for October delivery leapt 39 cents to $28.12 a barrel.

In New York, the light sweet crude October contract surged 67 cents to $29.52 a barrel.

Having fallen sharply a day earlier, after Bush’s remarks were taken as a sign that an attack on Baghdad might be further away than previously thought, oil markets bounced back as the threat of war appeared to move a step closer after comments from Iraqi Deputy Prime Minister Tareq Aziz.

Prudential Bache broker Christopher Bellew said: “The trigger for the rise were stories that Aziz said that it would not allow the unconditional return of weapons inspectors.”

But Bellew expressed some surprise at the extent of the rally in prices given that Baghdad’s rejection “hardly came as a shock”.

GNI analyst Lawrence Eagles believes that while some traders are estimating there to be a war premium of as much as $5 in the current oil price, in reality it is likely to be closer to $2-3.—AFP