The price of oil leapt today after Iraq announced it was suspending oil exports for 30 days to try to pressure Israel into withdrawing from Palestinian territories.
The price of light sweet crude for May delivery climbed 59 cents to $26.80 a barrel in early afternoon trade in the US. In London, benchmark Brent North Sea crude for May delivery spiked as high as $27.43 a barrel, but prices later stabilised around $27 a barrel, up from $25.99 on Friday evening.
Iraqi President Saddam Hussein said today that Baghdad was suspending oil exports for 30 days 'or until the armies of the Zionist entity have unconditionally withdrawn from the Palestinian territories they have occupied and respect the will of the Palestinian people and the Arab nation.'
Oil prices had risen even before the Iraqi announcement after Israel pressed ahead with its siege of the West Bank despite calls from US President George W Bush for an immediate withdrawal.
Most oil analysts expect other members of the Organisation of Petroleum Exporting Nations or non-OPEC nations to fill the shortage created by Iraq's suspension. They said that the impact on the market would be much more serious if other producers such as Iran and Libya were to join Iraq in halting exports.
On Friday, Iran's supreme leader Ayatollah Ali Khamenei called on Islamic oil-producing countries to suspend their exports to Western countries and those with relations with Israel for one month. But OPEC has rejected calls for collective use of the 'oil weapon' by the mainly Arab producer group.
Analysts noted that OPEC kingpin Saudi Arabia, the world's largest oil exporter, had plenty of excess capacity while non-OPEC producer Russia was anxious to start pumping more oil again. Moreover, the US has built up the strategic petroleum reserve, which it can start pumping at short notice.
