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Last Updated:  Thursday, 27 March, 2003, 21:10 GMT
Oil shortage rocks markets
Oil well on fire in Iraq
The battle is on to put out fires at Iraqi oil wells
Oil prices have marched higher and key share indexes have fallen, as the war in Iraq continues to dominate world markets.

The North Sea's Brent oil - a benchmark for world oil prices - gained $1.53 to $26.82, while US-grade oil rose by nearly two dollars to $30.37.

Oil has gained steadily in recent days as ethnic unrest in Nigeria combines with the conflict in Iraq to tighten supply in the global marketplace.

The commander of UK forces in the Gulf said on Thursday that it would take three months for oil exports to resume from Iraq's southern oilfields, longer than some had expected.

Iraq's usual exports of about 1.8 million barrels of oil a day have come to a standstill since the conflict began.

Africa's lock-in

Uncertainty is what stock markets most dislike.

The war has coincided with bloody clashes between tribal factions in Nigeria, Africa's largest oil producer.

The violence is now reported to have ceased but the big oil firms say it is still unsafe to return to the region to resume work.

Although oil prices are climbing significantly, they are still well below the 12-year highs of nearly $40 a barrel seen in the run-up to the war.

That spike was caused largely by fears that a war could affect oil supplies from the whole Gulf region rather than just Iraq, something that has not yet happened.

Dow rollercoaster

Meanwhile, the world's stock markets were falling on Thursday, as investors fretted about the impact of war on future economic growth.

London's FTSE 100 index of leading shares closed 64 points or 1.7% lower at 3,729, France's Cac 40 ended 2.3% down, while Germany's Dax had fallen by 1.5% in late afternoon trade.

In New York, the Dow Jones Industrial Average initially lost more than 100 points before rebounding strongly to stand 28 points, or 0.35%, at 8,201, a the closing bell.

In Asia, the Nikkei 225 index in Tokyo closed up 0.2% while Hong Kong's Hang Seng closed 1% lower.

Stock markets have see-sawed since the beginning of the war, as traders try to assess the progress of US-led troops in Iraq.

But, five trading days after the start of the war, none of the major indexes in the US and Europe have made any significant gains or losses.

"Long-term investors are sitting on the sidelines and there's a fair bit of trepidation about going long in such a risky environment," said Ken Masuda, a senior equity dealer at Shinko Securities.

Stock market moves explained
25 Mar 03 |  Business

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