World Oil prices jump as tanker attack stokes fear
Oil prices jumped on Monday after a suspected terror attack on a tanker off Yemen raised tensions on world markets already fretting about the possibility of an assault by the United States on Iraq.
London benchmark Brent rose 23 cents to $28,35 a barrel while US benchmark light crude gained 17 cents to $29,79 a barrel. Prices remain below recent $31 highs for US crude.
France opened a preliminary inquiry into the explosion on Sunday that gutted the French-flagged supertanker Limburg as it prepared to dock at Mina al-Dabah near Mukalla in Yemen.
A director of the French-flagged vessel’s owners, Euronav SA, said he thought terrorists using a small craft seen approaching the Limburg could have caused the blast.
The explosion raised speculation of a copycat attack similar to those two years ago when a boat laden with explosives crashed into the US destroyer USS Cole killing 17 US sailors.
The latest incident came a day before the October 7 anniversary of the launch of a military offensive by US and British forces in Afghanistan in retaliation for the September 11 plane hijack attacks in New York and Washington.
Analysts said already tense world markets had reacted to the explosion even though it was not likely to significantly impact flows of oil through the Middle East.
“There is a feeling in the market that this explosion highlights the danger to oil supplies from the region in case of war,” said GNI oil research analyst Lawrence Eagles.
Oil prices have been running high in recent weeks, as US President George Bush has stepped up a campaign for the removal of Saddam. Bush is scheduled to outline his case against Saddam in a televised address to the nation at 0001 GMT on Tuesday.
Bush said at the weekend that war with Iraq may be unavoidable and that a delay was not an option to keep Saddam from inflicting “massive and sudden horror” with chemical and biological weapons.
Oil traders fear war in the Middle East may disrupt flows of crude from the region, which accounts for about a third of world exports.
“There is a certain nervousness ahead of the Bush speech which could potentially move the United States closer to war,” Eagles said.
Washington and Britain are pushing for the UN to adopt a new tough resolution for the return of weapons inspectors to Iraq that would sanction military action if Saddam does not comply.
But the draft resolution is facing opposition from France, China and Russia, the other three permanent members of the council with veto powers.
Meanwhile the United States, the world’s largest oil consumer, is facing what could be a serious shortfall in crude and heating oil supplies ahead of the energy-hungry winter season.
Analysts say two consecutive hurricanes in the Gulf of Mexico that closed out imports and temporarily closed production facilities in the region, were likely to bit further into stocks which stood last week close to 25-year lows.