Asia oil prices surge on Iraqi attacks on Kurds
Asia oil prices surge on Iraqi attacks on Kurds
SINGAPORE (Reuter): Asian crude oil prices surged to a four-
month high yesterday after the United Nations delayed limited oil
sales by Iraq after Baghdad sent troops into Kurdish areas,
traders said.
SIMEX October Brent futures rose 82 cents to US$21.60 a barrel
in early trading from Friday's London close in response to UN
Secretary General Boutros Boutros Ghali's announcement on Sunday
that he would delay the oil-for-food plan until he could assess
the situation in northern Iraq.
Singapore gas oil swaps soared 50 U.S cents per barrel in
early trade.
Iraqi tanks and troops captured Arbil, Iraqi Kurdistan's
capital, on Saturday in the biggest Iraqi military incursion in
the allied-imposed northern "no-fly" zone since the Gulf War.
Troops expelled one Kurdish faction and installed a rival
group more favorable to Baghdad.
Oil prices began slipping from their highs around midday and
lost further ground when UN relief officials and guards said
Iraqi troops, heavy armor and artillery had evacuated Arbil. As
of 0700 GMT October Brent had lost 30 cents from its high and was
trading at $21.30.
"All Iraqis have left Arbil. We cannot see any more tanks or
vehicles or artillery. They are about five kilometers (three
miles) away now," one UN official in Arbil told Reuters.
There was no immediate reaction from the United States where
President Bill Clinton had been conferring with American allies
on how to respond to the Iraqi move.
Asian oil traders said they were now awaiting more news from
the United Nations and the United States, the leader of the Gulf
War coalition which defeated Saddam Hussein in early 1991 but
left him in power.
"While the news (of the withdrawal) may cause levels to drift
lower, the market would remain supported until we hear more of
UN's decision on the oil deal," one broker said.
Boutros Ghali said he had "decided to delay the deployment of
certain personnel who will supervise the implementation of
Resolution 986", a reference to the Security Council document
that sets out the oil-for-food plan.
The $2-billion oil-for-food plan would allow Baghdad to sell
oil over six months to buy food and medicine in a temporary
easing of UN economic sanctions imposed after Iraq invaded Kuwait
in August 1990 and triggered the Gulf war.
Before the delay was announced, Baghdad had hoped to resume
oil sales this month. Iraq, which holds the world's second
largest oil reserves behind Saudi Arabia, has been effectively
barred from oil shipments since the invasion.
The world oil market has been watching the plan's progress
closely, fearing prices would slump when up to 700,000 barrels of
Iraqi oil per day begins flooding the market.
Clinton has placed U.S. forces in the region on high alert and
spoke by telephone on Sunday to several world leaders, including
British Prime Minister John Major and Saudi Arabia's King Fahd,
about the crisis.
U.S. officials, however, said Arbil was not in the zone placed
off limits to Iraqi troops at the end of the Gulf war, oil
traders noted. But U.S. officials said it was within the "no-fly
zone" and UN resolutions broadly protecting Kurds against
repression applied.
"We are watching the market closely. It will be a news-driven
market for a while until the deal eventually pulls through," a
broker said.
Brokers also noted that White House officials have said that
the deal would go through because of its humanitarian aims
despite criticism from Republican presidential candidate Bob
Dole.