Oil price rises on concerns of U.S. retaliation

Oil price rises on concerns of U.S. retaliation
by Daniel Rook

LONDON (AFP): The price of oil climbed here on Friday on the
back of renewed concerns about the prospect of possible U.S.
retaliation for the atrocities targeted on New York and
Washington.

Brent North Sea crude for November delivery rose 79 cents a
barrel to US$29.16.

The New York market remained shut, while the London Petroleum
Exchange said it would close early at 17:45 (16:45 GMT) at the
request of traders and clients.

Oil prices have been caught in a two-way pull since the
devastating attacks on U.S. targets on Tuesday. Concerns that
U.S. retaliation could draw Gulf Arab producer nations into a
wider conflict have been pulling against concerns about the
impact on crude demand of the assault on the hub of global
capitalism.

"The market's very nervy," said David Nesbitt, a broker with
the Prudential Bache house.

"The crude is also reacting to headlines like, 'Taliban chief
spokesman warns of revenge if U.S. attacks Afghanistan', and
that's just taken us though $29," he told AFP.

Recent comments from U.S. leaders have fueled renewed concern
that Arab oil producing countries could turn to the oil weapon in
the face of any US retaliation, despite widespread condemnation
of the attacks by Arab leaders, with the notable expection of
Iraq.

Traders have not forgotten the price surges of 1973-4, 1990
and last autumn that followed stand-offs between Western powers
and Arab crude producers.

The United States said on Thursday that Saudi terrorist Osama
bin Laden, thought to be living in Afghanistan, was a prime
suspect in Tuesday's attacks.

The U.S. administration has not yet given any information
about any possible response.

The Afghan Taliban Islamic militia warned on Friday that it
expected to be hit by a massive attack by the United States and
vowed that it would take revenge.

"We are ready to pay any price to defend ourselves and to use
all means to take our revenge," a spokesman for Taliban supreme
leader Mullah Mohammad Omar told AFP in Kabul by satellite phone
from the Taliban stronghold of Kandahar.

Lawrence Eagles, a commodities expert with the GNI brokerage,
said: "It is generally viewed as a certainty that the U.S. will
respond to this attack in some fashion, and there remains a small
fear that it may lose some Middle Eastern support as a result."

The Organization of Petroleum Exporting Countries (OPEC) has
promised to pump enough oil to world markets to ensure their
stability after the attacks.

The OPEC basket price, which the cartel targets at $25, rose
to $26.23 a barrel on Thursday from $26 on Wednesday, the OPECNA
agency reported from Vienna.