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EDITIONS
 Friday, 17 January, 2003, 06:51 GMT
War jitters send oil price soaring
Oil tanker
Increased supplies are little comfort for the US
Oil prices have surged to their highest level in more than two years, after chief UN weapons inspector Hans Blix gave a bleak assessment of the Iraq crisis.

The price of benchmark Brent crude rose 43 cents to $31.65 per barrel.

Prices in New York reached $33.66 a barrel by the end of trading, their highest level since November 2000.

The jump in prices came as Mr Blix warned Iraq it must do more to avoid the threat of war.

Increased production

The price of oil has been climbing since Monday, despite an agreement by producers' cartel Opec to boost output.

Chief UN weapons inspector Hans Blix
Hans Blix says he is losing patience
Prices were initially pushed up by a cut in production in Venezuela because of a general strike.

But the possibility of a war with Iraq has added pressure.

The markets think the Opec production increase will not be enough to fill the gap.

Crucial deadline

The high cost of oil could threaten the global economy which is still struggling to show any significant growth.

Hans Blix sent jitters through the markets after he said he was becoming "very impatient" with Bhagdad.

Weapons inspectors were also reported to have found empty chemical warheads.

However, Mr Blix played down the significance of the 27 January target date for him to report to the United Nations Security Council.

That date has been seen by some as a crucial deadline after which the US could attack Iraq.

Opec meeting

But Mr Blix said he was nearly certain that the Security Council will ask him to produce a new and updated report on Iraq in February.

Iraq sells up to 2 million barrels per day on the international market, but that would be stopped by a war.

Meanwhile, oil shipments by Venezuela, which supplies 13% of US needs, are still down to about 20% of normal export levels.

Opec agreed to increase official production after an emergency meeting in Vienna last Sunday.

Another Opec meeting is scheduled for 11 March.

  WATCH/LISTEN
  ON THIS STORY
  Nigeria's oil minister, Dr Rilwanu Lukman
"There is a limit to how cheap we can make oil."
Analysis of the oil market, OPEC, and the alternatives

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Analysis

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See also:

13 Jan 03 | Business
12 Jan 03 | Business
10 Jan 03 | Business
13 Aug 02 | Business
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