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EDITIONS
 Monday, 30 December, 2002, 09:36 GMT
Oil price surges to two-year high
US strategic oil reserve
The US has been stockpiling oil to prevent shortages
Oil prices have soared to a two-year high as fears of a United States-led war with Iraq and a national strike in Venezuela have disturbed the markets.

The speculation over a possible war with Iraq is driving all this buying

New York oil trader

The oil price broke through $33 (20.5) per barrel on Monday, the highest price since December 2000.

Output from Venezuela, the world's fifth largest oil exporter, has been choked off by the month-long national strike.

The price of light crude for delivery in February rose 1.4% to $33.17 a barrel on Monday morning in out-of-hours electronic trading on New York's Nymex market, a two-year high.

Troop movements

In London, the price of benchmark Brent crude rose 44 cents to $30.60 a barrel.

The US government ordered more troops, war planes and naval vessels to move into to the Gulf over the weekend.

President Hugo Chavez
President Chavez: strikers are 'traitors'

Analysts believe February or March are the most likely months for the battle of words between the US and Iraq to turn into a shooting war.

"The speculation over a possible war with Iraq is driving all this buying, with many in the market keen to cover any eventualities by tapping both the February and March contracts," one broker in New York told Reuters news agency.

Trade was particularly heavy in oil for delivery in March.

International tensions are also simmering over North Korea's nuclear programme, after its officials removed monitoring devices set up by the International Atomic Energy Authority (IAEA) and announced plans to restart nuclear generators.

Tough tactics

In Venezuela, opponents of the left-wing President Hugo Chavez took to the streets on Sunday to show their continuing support for the national strike and to demand early elections.

Venezuela has been forced to import oil as its own production has slumped to roughly 10% of pre-strike levels, though government and strikers dispute the amount still being pumped.

There is little sign of an end to the deadlock between the government and its opponents, a coalition of business and trade union interests.

The president, in his weekly radio address, called the strikers "traitors" and threatened to sack more than 200 oil plant managers who have joined the strike.

About 90 officials have been dismissed since the strike began 29 days ago.

US crude oil prices rose to $32 a barrel for the first time in almost two years shortly before Christmas.

Fears of war in the Middle East have pushed oil prices well above their $29.88 peak after the 11 September terrorist attacks last year.

February crude was trading at $33.09 cents a barrel at 0450 GMT on Monday, compared with the Friday closing price of $32.72.

See also:

30 Dec 02 | Business
30 Dec 02 | Americas
24 Dec 02 | Business
24 Dec 02 | Business
Links to more Business stories are at the foot of the page.


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