Crude oil rose to the highest price in more than two years after US Secretary of State Colin Powell said the US has proof Iraq is hindering UN weapons inspectors.
Powell told a German newspaper that Iraqi leader Saddam Hussein is not giving UN inspectors unfettered access to documents as they search weapons of mass destruction. Oil prices gained 89 percent in the past year partly on concern the US will opt to disarm Iraq by force, threatening shipments from the Persian Gulf, where a quarter of the world's oil is pumped.
"People are very nervous about what may happen to crude supplies," said Charles Carroll, a trader at Champion Energy Corp, a Greenwich, Connecticut-based fuel distributor. "The market is being driven by the latest news on Iraq."
Crude oil for February deliver rose US$0.25, or 0.7 percent, to US$33.91 a barrel on the New York Mercantile Exchange. It was the highest closing price for a contract closest to delivery since Nov. 29, 2000. Prices rebounded from a decline to US$32.90 in early trading. Trading ended early and the exchange will be closed Monday for the Martin Luther King Jr. holiday.
In London, the March Brent crude-oil futures contract was US$0.04 lower at US$30.54 a barrel on the International Petroleum Exchange.
Oil in New York gained 7.3 percent this week and has rallied 27 percent since the inspectors arrived in Iraq in late November.
A strike in Venezuela that's disrupted exports contributed to the rally.
"We believe that we can prove convincingly at the end of the month that Iraq is not cooperating," Powell said in an interview with the Sueddeutsche Zeitung in Munich. Hussein "is hindering the inspection of documents. He's misleading the inspectors."
A UN team found 11 warheads yesterday at the Ukhaider ammunition storage area about 120km southwest of Baghdad, bolstering US claims that Iraq has spurned UN arms mandates. The warheads were in "excellent condition," the UN said.
Prices fell in early trading after International Atomic Energy Agency Director Mohamed ElBaradei said he and chief UN inspector Hans Blix will ask the UN Security Council for more time to investigate whether Iraq has banned weapons.
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