LONDON (AP) – Oil prices surged yesterday in a fresh wave of anxiety after Iraq cut off crude exports to demonstrate support for the Palestinians in their struggle with Israel.

Paul Wong
Traders buy and sell Light Sweet Crude Oil at the trading pits of the New York Mercantile Exchange yesterday, after oil prices surged when Iraq cut off crude exports. AP PHOTO

At the same time, labor strife in Venezuela squeezed that country’s oil shipments to a trickle. The combined effect of the supply interruptions added to existing concerns stoked by tensions in the Middle East, home to two-thirds of the world’s proven oil reserves.

Crude futures prices spiked as much as $1.44 a barrel, or six percent, in London, and $1.02 in New York.

Some energy analysts played down the risk that major, long-term supply disruptions might result. Analysts suggested other members of the Organization of Petroleum Exporting countries, which pump a third of all crude, would intervene to offset a major shortfall in supplies.

Leaders of the oil producers’ group expressed alarm at the latest developments.

“After the announcement of Iraq to suspend exports and the effect of Venezuela’s exports, we could go directly to an oil crisis,” OPEC Secretary-General Ali Rodriguez told Venezuela’s Radio Caracas Radio in an interview from Qatar.

Iraq and Venezuela jointly export about 4.5 million barrels a day, or about six percent of global supplies. President Saddam Hussein announced that Iraq would suspend oil exports starting yesterday for 30 days or until Israel withdraws from Palestinian territories. His unilateral cutoff could put more pressure on other Arab leaders to move against Israel in retaliation for its offensive.

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