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EDITIONS
Tuesday, 27 August, 2002, 12:52 GMT 13:52 UK
War fears send oil price higher
A North Sea oil platform
Opec is giving conflicting signals
Oil prices in London have risen to their highest level for 11 months.

They were pushed up by renewed fears of a US attack on Iraq and by worries about a reduction in oil supply.

On Tuesday morning London's benchmark brent crude rose 87 cents to $27.86 a barrel.

The price rise followed comments from the US Vice President Dick Cheney who said that the US might have to use pre-emptive military action to oust Iraqi President Saddam Hussein.

Threat to economic growth

On Monday the US benchmark light sweet crude oil jumped 2.3% to $29.28 a barrel.

Prices continued rising when markets opened in Asia on Tuesday - up another 11 cents to $29.39.

And in electronic trading there were further gains of 32 cents, taking the price to $29.63 a barrel.

Many oil analysts and oil importing nations believe that oil prices of $30 a barrel will threaten economic growth.

Conflicting signals

Analysts say the risk of war has bolstered the price of oil by about $5 a barrel in recent weeks, but that is only one reason for higher prices.

The second factor behind the price rise was uncertainty about whether oil producing countries will increase output when they meet on 19 September.

Members of the 11-nation Organisation of Petroleum Exporting Countries (Opec) have given conflicting signals about their willingness to ease production restrictions.

Analysis of the oil market, OPEC, and the alternatives

Key stories:

Analysis

Background
See also:

20 Aug 02 | Business
01 Aug 02 | Africa
01 Aug 02 | Business
31 Jul 02 | Business
26 Jun 02 | Business
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