Oil prices rise on war nerves

The price of US crude, which had slid earlier this week, rose nearly 5% to $32.04 a barrel.

CUT BACK
" As soon as Venezuela comes back, for sure, Opec will come back to cut production "
Abdullah Al-Attiyah, Opec president

In London, Brent crude added $0.88, or 3%, to close at $29.67 a barrel.

The rises followed comments by heads of the United Nations weapons inspections that Iraq needed to provide "pro-active" co-operation with the teams searching for banned weapons.

A declaration issued by Baghdad last month on its weapons programmes left many questions unanswered, said Hans Blix, the United Nations' chief weapons inspector in Iraq.

Mr Blix added that his inspectors had not found any "smoking gun" as evidence of weapons of mass destruction.

But the statement was nonetheless taken by US ambassador John Negroponte as evidence that Iraq was in breach of UN resolutions.

"What we have seen of Iraq's actions over the past six weeks does not constitute active co-operation," Mr Negroponte said.

Key meeting

Fears of war with Iraq, and interruption of supplies from the Middle East, have pushed oil prices up nearly 30% since mid-November.

Prices have also been supported by an oil supply squeeze prompted by a five-week national strike in Venezuela.

Meanwhile US crude stockpiles have fallen to their lowest level for 26 years.

But oil producers' cartel Opec is due to hold an emergency meeting on Sunday, and member governments have said they are discussing boosting production by roughly 2.5% of global output.

Opec president Abdullah Al-Attiyah, has said he expects member countries to start pumping more oil from 1 February if an agreement to raise quotas is reached.

Officials from Kuwait and Saudi Arabia have said they want to see an increase of about 1.5 million barrels per day from the current global quota of about 23 million barrels a day.

But Mr Al-Attiyah added: "As soon as Venezuela comes back, for sure, Opec will come back to cut production to accommodate Venezuela and create a balance between demand and supply."

The national strike in Venezuela remains deadlocked.

Bank workers unions have said they will join the dispute, while the government has ordered dismissals of striking oil administrators.