Friday, April 05, 2002

Oil prices stabilize on hopes for peace

The Associated Press

        LONDON — Oil prices stabilized Thursday in a fresh sign that world markets were overcoming concerns that Iraq might halt its crude oil shipments to countries that support Israel.

        However, fears that Israel's offensive against the Palestinians could further destabilize the Middle East are still keeping crude prices well above levels justified by demand for oil, analysts said.

        OPEC Secretary-General Ali Rodriguez echoed that view, saying the Organization of Petroleum Exporting Countries has no plans for now to increase crude oil output. Mr. Rodriguez told the British Broadcasting Corp. in Dubai that the recent spike in oil prices was the result of speculation and “political uncertainties” rather than any change in supply or demand.

        “We (OPEC) can't increase supply if demand is as low as it is now,” he said.

        OPEC pumps about a third of the world's crude.

        On the New York Mercantile Exchange, the front-month May crude oil futures contract dropped 98 cents to close at $26.58 a barrel after climbing to a six- month high of $28.35 a barrel. The NYMEX price for May contracts fell 15 cents Wednesday.

        In London, contracts of North Sea Brent for May delivery rose 4 cents to $27.31 on the International Petroleum Exchange, after closing 39 cents lower Wednesday.

        Crude futures surged to six-month highs Tuesday, after Iraqi Foreign Minister Naji Sabri declared in Kuala Lumpur, Malaysia, that Arab countries have the right to coordinate their policies to put pressure on Israel and its allies. The threat was clearly directed at the United States.

        Iran's Foreign Minister Kamal Kharrazi added that such a boycott could work if it had backing from many oil producers.

        Ali Tahghighi, an oil analyst at Barclays Capital, doubted such an embargo could be effective.

        “Anybody who is really serious about an embargo would have to have the Kuwaitis and the Saudis on board, and the indications from them are that they're not even thinking about such a thing.”


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