Oil prices yesterday jumped towards their highest level since September on fears of a full-blown US attack on oil exporter Iraq after Baghdad ruled out a return of UN weapons inspectors.
International benchmark Brent crude oil climbed 58 cents to $23.91 a barrel in London, extending a rally that has added a quarter to the cost of a barrel in a month. US crude added 48 cents to $24.32 a barrel.
Prices briefly hit a six-month high above $24 last week on a combination of Iraq war fears, a strengthening economic recovery and deepening supply cuts by the OPEC cartel.
Traders have become increasingly nervous about US intentions in Iraq after President George W Bush labelled its former Gulf War enemy part of an 'axis of evil' with Iran and North Korea.
Any interruption in Iraqi supply, coming at a time when the economic recovery should be gathering steam, could exacerbate the impact of OPEC's supply cuts, analysts believe. Iraq accounts for 5% of world oil exports.
