LONDON, Dec 29: Oil prices briefly soared above $40 a barrel Monday on rising unrest in the Middle East and evidence that Opec members have begun complying with agreed output cuts, traders said.

Brent North Sea crude for delivery in February was up 99 cents at $39.36 a barrel in afternoon trade on London’s InterContinental Exchange after earlier rocketing almost $5.

New York’s main contract, light sweet crude for February delivery, gained 88 cents to $38.59.

Prices rose as escalating violence in Gaza raised fears of wider tensions in the oil-rich Middle East, traders said. However thin trade owing to the year-end holiday season made for some price volatility.

“Although ongoing tensions could keep things fairly well bid for a while, we suspect that prices will eventually buckle under the relentless barrage of poor macro-economic headlines,” said Edward Meir, an analyst at MF Global.

Analysts said the price gains were additionally supported by evidence that the oil producers’ cartel Opec was cutting its output following an announcement earlier this month to do so.

The Organisation of the Petroleum Exporting Countries is starting to notify customers about the extent of production cuts, said Dave Ernsberger, Asia senior editorial director of Platts, an energy information provider.

“People are starting to see evidence on Opec cuts,” he said.

Ernsberger said the United Arab Emirates gave notice at the weekend of output cuts of between three to 15 per cent, an example that cartel nations are serious about reducing production.

Previous Opec output cuts have often been met with only partial compliance.—AFP