December 29, 2002	Sunday	Shawwal 24, 1423

LONDON: The dollar fell to its lowest for almost three years on Friday, undermined by worries about the US economy, the rising oil price and increasing tensions over Iraq and North Korea. Against the euro the dollar slipped to its weakest since January 2000 while on the oil market North Sea benchmark Brent topped $30 a barrel and US crude hit $32.73 — its highest for two years.

The pound fell to just under pence sterling 65 against the euro — its worst since the summer — but topped $1.60, its best against the greenback for two-and-a-half years.

The oil price is being driven by a general strike against president Hugo Chavez in Venezuela which has cut the country’s output to little more than a trickle. Analysts are warning that the reduction in Venezuelan supplies could have an impact on petrol prices.

“If the strike continues and stocks don’t build we could see a massive spike in gasoline prices. This would definitely impact motorists as well. We could see rises of pence sterling 3 to pence sterling 4 a litre by the second quarter of next year,” according to Orrin Middleton at Barclays Capital.

BP said it had no immediate plans to raise prices but acknowledged it was seeing inflationary pressures at the pumps and that it was monitoring the situation. Shell said it had no plans to make any “pro-active move” but was ready to follow any increases by its main rivals.

Saudi Arabia, the leading Opec producer, has said it will not allow shortages to develop, despite the recent move by the oil producing cartel to tighten production quotas. So far Opec officials insist there are no signs of any real shortages.

On the foreign exchanges the dollar fell to $1.0397 against the euro while the Swiss franc stood at 1.3987 to the greenback — its best for four years.

Analysts cited the war of words between the US and North Korea over the latter’s nuclear programme and concerns about the possibility of military action against Iraq as factors weighing on the dollar.

“The dollar is under pressure. Any good news provides only a very short term boost but any bad news sparks a sell-off straight away,” according to Nick Parsons, currency economist at Commerzbank in London.—Dawn/The Guardian News Service.