The price of oil shot up more than a dollar to close to $30 a barrel on Friday, September 14, as the market fretted about the prospect of US retaliation for the atrocities targeted on New York and Washington.
Brent North Sea crude for November delivery surged as high as $29.82 a barrel, up $1.45 from Thursday's close. It later settled back at $29.54 within an hour of an early closing of the London Petroleum Exchange at 5:45 pm (1645 GMT).
Prices have been pulled in both directions since the devastating attacks on US targets on Tuesday. Some had feared that the terror strikes would tilt the world economy into recession, depress oil demand and hence sap crude prices. But on Friday, the other tendency was holding sway: that US retaliation for the outrage would aggravate tensions between the United States and Gulf Arab producers.
"The market's very nervy," said David Nesbitt, a broker with the Prudential Bache house. "The crude is also reacting to headlines like, 'Taliban chief spokesman warns of revenge if US attacks Afghanistan', and that's just taken us through $29,” he told AFP.
Though moderate Arab leaders have condemned the terrorist attacks and expressed sympathy with the United States, that sentiment may evaporate if US retaliatory measures aimed at chief suspect Usama Bin Ladin results in more loss of innocent lives.
Traders have not forgotten the price surges of 1973-4, 1990 and last autumn that followed stand-offs between Western oil-importing countries and Arab crude producers. The Afghan Taliban Islamic militia warned on Friday that it expected to be hit by a massive attack by the United States and vowed that it would take revenge.
"We are ready to pay any price to defend ourselves and to use all means to take our revenge," a spokesman for Taliban supreme leader Mullah Muhammad Umar told AFP in Kabul by satellite phone from the Taliban stronghold of Kandahar.
Lawrence Eagles, a commodities expert with the GNI brokerage, said: "It is generally viewed as a certainty that the US will respond to this attack in some fashion, and there remains a small fear that it may lose some Middle Eastern support as a result."
The Organization of Petroleum Exporting Countries (OPEC) has promised to pump enough oil to world markets to ensure their stability after the attacks. The OPEC basket price, which the cartel targets at $25, rose to $26.23 a barrel on Thursday from $26 on Wednesday, the OPECNA agency reported from Vienna. — (AFP, London)
by Daniel Rook
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)
