September 24, 2002	Tuesday	Rajab 16, 1423

LONDON, Sept 23: War fever drove US oil prices to a 19-month high on Monday as dealers took fright at the growing threat of an attack on Iraq.

A tropical storm sweeping across a key oil producing region in the United States, causing thousands of oil workers to evacuate, also helped fuel the rally.

Benchmark US crude oil jumped $1 to $30.84 a barrel by midday in New York, its highest level since February 2001.

North Sea Brent gained 82 cents to $29.25, its highest level in a year.

Dealers said Baghdad’s decision to reject any new UN resolution on Iraq, combined with Israel’s siege of Palestinian leader Yasser Arafat’s Ramallah headquarters drove the gains.

“The U.S. wants a new resolution and Saddam is rejecting that — that’s bullish. With Ramallah as well the tension is getting very high,” said Gary Ross, head of PIRA Group consultants in New York.

Sustained tension in the Middle East, which pumps a third of the world’s crude, has already driven oil prices up 50 percent this year.

Dealers said the threat of a US-led strike on Iraq grew after Baghdad vowed on Saturday to reject any new Security Council resolution, which differed from an agreement reached with the UN secretary-general to readmit weapons inspectors.

The Middle East-dominated Opec cartel has said it will move to make up for any supply disruptions, but could not guarantee to quell a speculative oil price spike driven by war fears.

In the world’s largest energy consumer, the United States, offshore rigs were threatened by storms.

Oil and gas companies continued evacuations of non-essential personnel from platforms in the Gulf of Mexico as Tropical Storm Isidore threatened to move northwest toward the region which pumps a quarter of US oil and natural gas.

The largest oil port in the United States, the Louisiana Offshore Oil Port, said it stopped unloading vessels on Saturday due to high swells from Isidore.

Opec last week opted to hold official output limits at the lowest level in a decade, defying consuming countries calls for more oil ahead of the northern winter.

Economists have warned the fragile US and Asian economies are in no state to absorb further gains in oil prices, which hit drivers at the gasoline pump, eat into company profits and hamper growth.

“I cannot believe Saudi Arabia will let the market overheat for any length of time,” said Raad Alkadiri of Washington’s Petroleum Finance Company.

“They have signalled time and again they are willing to make up for any shortfall. Their credibility as the world’s strategic supplier demands that.”

Opec has adopted a formula to raise output automatically if its reference price exceeds the top end of its $22-$28 per barrel target range for more than 20 days. The basket was last valued at $27.60 on Friday.—Reuters