LONDON, Sept 9: The price of oil held up close to recent highs on Monday as traders remained on alert for signs on the timing of any US-led attack on Iraq.

Brent North Sea crude for October delivery stood at $28.35 a barrel against $28.29 at the previous close.

Brent prices rallied to the highest level for almost a year on Friday, approaching $29 a barrel on concerns that an attack on Baghdad is drawing closer. In New York, the light sweet crude October contract gained 63 cents on Friday to $29.61 a barrel.

US President George W. Bush and British Prime Minister Tony Blair agreed at the weekend in Maryland to seek broad international support for a coalition against Iraq, including a possible return to the United Nations.

But they warned their patience with Iraqi President Saddam Hussein is running out, British sources said.

The message from the United States and Britain over the weekend seemed to be clear, said Lawrence Eagles, analyst at brokers GNI.

Saddam is developing nuclear weapons and has to be stopped.

Eagles said that an attack on Iraq in itself would not have a huge impact on the oil market because any military action would probably be over very quickly and would affect less than one million barrels per day of exports.

Of greater concern was what the reaction of surrounding Gulf oil producers might be.

If those countries should decide to impose an oil embargo against the United States if it attacks Iraq, then the oil price could rise sharply.

We doubt that any regime wants to take such action, but it is the extent of anti-US feeling among the people in the region that creates a huge uncertainty for the oil market, Eagles wrote in a research note.

Traders were also mulling comments from Algeria that it will ask the Opec oil cartel for a steep increase in its production quota, from 693,000 barrels per day to 1.1 million bpd.

We’re going to ask Opec to raise our quota to 1.1 million bpd, and we’ll have to think about another increase by the end of 2004 when our production capacity will go up to 1.5 million bpd, Algerian Energy Minister Chakib Khelil said Saturday in Algiers.

The Organization of Petroleum Exporting Countries is to meet in Osaka, Japan, on September 19.—AFP