Oil prices today hit their highest levels since the start of the war in Iraq amid concerns about the loss of momentum in the military campaign and a sharp cut in Nigerian supplies.
Brent crude, a benchmark for world prices, this morning rose 56 cents to $27,38 a barrel, with prices jumping 17% since hitting a four-month low on March 21.
Oil prices fell sharply last week after the US and Britain invaded Iraq, but prices have risen over the last five days as US and British forces run into stiff resistance and concern grows that the conflict will drag out longer than expected.
Those concerns came to the fore when President George Bush yesterday said that the campaign against Saddam Hussein, the Iraqi dictator, would go on ”how ever long it takes”. Tony Blair, for his part, said that the war will take time and will be tough and difficult.
Murmurs of discontent within the Bush administration at the hi-tech, blitzkrieg strategy adopted by the US secretary of defence, Donald Rumsfeld, has added to the impression that all is not going well in the US-led campaign.
Meanwhile, problems with Nigerian oil added to the pressure on oil prices. Nearly 40% of Nigeria’s 2,2 million barrels of daily output has been shut down after bloody clashes between tribal groups in the oil-rich Niger Delta.
Despite a ceasefire, foreign oil firms consider it too unsafe to return to oilfields that have been affected by the fighting. Africa’s biggest producer is one of the six biggest oil exporters to the US, having sold more than 560 000 barrels a day to America last year.
Oil prices have risen in recent days even though Middle East producers have increased production to cover for the loss in Iraqi production. Iraq normally exports about 1,8 million barrels a day.
Opec, the oil cartel, has pledged to fill any gaps left by a halt in Iraqi supplies or disruption in Nigerian oil and Opec officials have said there that there is no shortfall in supply at the moment. Damage to Iraqi oil wells has been limited as well, but traders are worried about prolonged disruption to Iraqi oil production if the war drags out. – Guardian Unlimited Â