Asian crude price hits post-Gulf War high over Iraq
Asian crude price hits post-Gulf War high over Iraq
SINGAPORE (Reuter): Crude prices in Asia jumped to a post-Gulf
War high yesterday as another round of hostilities between Iraq
and the United States sparked a fresh buying flurry.
The benchmark front-month October futures contract on the
Singapore International Monetary Exchange (SIMEX) jumped to trade
at US$23.80 per barrel, its highest since Iraq invaded Kuwait in
1990 and pushed Brent prices to $40.95.
By late afternoon trading yesterday, the front month contract
was last traded at $23.70, up 12 cents from the close on London
International Petroleum Exchange (IPE), where Brent is also
traded.
The SIMEX Brent price was the highest level reached by Brent
in Asian trading, but was just two cents short of London's post-
Gulf War high hit overnight on news Iraq had launched a surface-
to-air missile at two U.S. fighters patrolling the northern no-
fly zone.
The U.S. fighters did not retaliate because they could not
lock onto the launch site before its tell-tale radars were
switched off.
The U.S. benchmark October contract on the New York Mercantile
Exchange (NYMEX) was last traded during Asian hours at $24.76 per
barrel, up just one cent from the New York close.
The NYMEX contract trades on a screen-based system called
ACCESS when New York is closed.
The latest round of hostilities raised the prospect for a
further crude price rally, should the tension increase, oil
traders said.
Crude prices often rise during times of tension because of the
threat to supplies. Prices are especially sensitive to tension
involving the Gulf, where 65 per cent of the world's proven crude
reserves sit.
U.S. Defense Secretary William Perry said Saddam Hussein
"would soon learn that we are not playing games" and that any
retaliation by the U.S. and its allies would be
"disproportionate" to what he called new Iraqi provocations.
Eight radar-avoiding F-117A "Stealth" fighters were flying to
Kuwait and four B-52s were being transferred from Guam in the
Pacific to a British air base in the Indian Ocean.
"If there is any retaliation from the U.S., I strongly believe
that the market will rally," one crude oil broker said.
But traders said they did not expect a dramatic rally in the
absence of the conflict spreading to involve other countries.
Prices were not likely to match those of the 1990/1991 Gulf
War when Brent reached as high as $40.95 per barrel.
"I don't think people believe there's a real potential for the
conflict to spread," a Tokyo-based trader said.
"It's difficult to see how the confrontation can in any way
effect the supply of oil -- that's what it all boils down to," a
another Tokyo trader said.
Last week, the United States launched two missile attacks
against Iraq in retaliation for Baghdad's incursion against
northern Kurds.
The United Nations put on hold a $2 billion oil-for-food deal
with Iraq that would have market Baghdad's return to the
international oil market for the first time since the Gulf War
with exports of 700,000 barrels per day.
In London, oil prices hit a new post-Gulf War high yesterday
as a nervous oil market braced for another U.S. military strike
against a defiant Iraq, posing a threat to the world's only spare
oil production capacity.
World benchmark Brent blend crude oil futures traded as high
as $24.06 a barrel yesterday morning, up 48 cents on the day and
besting Wednesday's peak of $23.82 which was the highest prompt
price on London's International Petroleum Exchange since January
1991 in the middle of the Gulf War.