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Monday, 23 September, 2002, 17:37 GMT 18:37 UK
Oil price soars on war fears
Acting oil minister for Kuwait surrounded by journalists
Opec ministers face pressure to raise output
The price of oil has surged above $30 a barrel again, hitting a 19-month high as traders fret about the likelihood of war in the Middle East.

The rising tension in the Middle East as Israeli forces have flattened most of the Palestinian Authority's headquarters, threatening Yasser Arafat, has raised tensions still further.

Oil producers cartel Opec resisted international pressure earlier this month to raise output in order to calm markets unsettled by the prospect of a war between the US and Iraq.

Leaders of oil producing nations have brushed off the latest price rise.

"We are watching the markets closely but we are not worried yet," Opec secretary general Alvaro Silva Calderon said.

War fears

Crude oil for delivery in November rose $1 in electronic trade in New York to $30.84 by midday on Monday.

In London, Brent crude for November delivery was up $0.82 to a new high for the year of $29.25.

An Iraqi government spokesman said over the weekend that his country would not accept any new resolutions on weapons inspectors that overturned its agreement with UN secretary general Kofi Annan.

Iraq's agreement to re-admit UN weapons inspectors for the first time since 1998 had cooled rising prices in recent days.

The price of oil has risen more than 40% this year on fears of a Middle East war.

Opec holds output steady

Opec members have agreed to restrict output through production quotas in order to support the oil price.

However, Opec is committed to increasing production if the oil prices break out of its target range of $22-28 a barrel for 20 days.

The Opec secretary general reportedly repeated that promise on Monday.

When the global economic slump caused a drop in oil prices last year, the cartel cut back production in order to lift the price.

Since January this year, it has kept its quotas on hold, and watched the oil price creep steadily higher.

In recent days, oil prices have ricocheted between the $27 and $30-a-barrel levels.

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 ON THIS STORY
Peter Gignoux, Schroeder Salomon Smith Barney
"I think [oil prices] will stay right where they are, maybe creep a little higher until there's an episode in Iraq"
See also:

19 Sep 02 | Business
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17 Sep 02 | Middle East
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13 Aug 02 | Business
13 Aug 02 | Business
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