Iraq war fears, Class Chat, The Politics of Oil, Fall, 2002

This article illustrates another reason why the United States would be better of by distancing itself from Middle Eastern exporters. Our nation should increasing oil imports from allied exporters such as Canada, Mexico, and even Putin led Russia. The possible shortage caused by an Iraqi war highlights the need to drill in Alaska in order to increase our own strategic reserves. The United States should no longer be energy dependent on countries led by despotic governments who wish nothing but harm to Americans. These hypocritical governments are same that cheered on 9/11 but are all to quick to accept our Red Cross aid.

Iraq war fears push up crude prices and oil sector shares
By Malcolm Moore (Filed: 28/08/2002)

The price of oil in London jumped to its highest level since the day after the September 11 attacks yesterday over fears of an imminent war with Iraq.

US vice-president Dick Cheney's call to arms on Monday night saw a war premium placed on oil and London benchmark Brent crude for October delivery was trading as high as $27.92 a barrel.

Shares in BP swelled 15 to 543p and Shell saw a rise of 9 to 460p off the back of the increase.

The rise was also brought about by a statement on Friday from Hugo Chavez, president of Opec member Venezuela, that he would urge the cartel not to relax its supply restrictions at the annual meeting next month in Japan. Kuwait has also said that it does not want to see increased production.

Analysts now fear that unless Opec does boost its output, there could be a shortage in oil stocks by the end of the year.

Mike Rothman at Merrill Lynch said: "The rhetoric about a potential war in the oil belt is garnering attention mainly because it's occurring against a backdrop of oil storage that's trending to below-normal levels."

Rilwanu Lukman, president of Opec, continues to insist that the cartel will not allow the price of oil to rise above the $30 a barrel watershed and said yesterday that Opec has "enough oil to put into the market if needs be".

The war premium on each barrel is now thought to stand at between $5 and $6, and there were fears yesterday that the price of petrol could rise in response. But petrol companies said that it was unlikely there would be an immediate impact on motorists.

A spokesman for BP said: "We don't change prices once we see crude move in any one direction. The most important thing for us is the international price of petrol.

"As petrol is a derivative, we look at crude, but just because crude is going up it doesn't follow that petrol will do the same."

Meanwhile, a spokesman for Texaco said that any change in price was more likely to be down to "competitive reasons".