Oil Eclipses Gulf War High

Top $37 A Barrel For First Time Since '91 Markets Worried About Iraq-Kuwait Tension Saudi Arabia Takes Wait-And-See Approach Before Pumping More Oil

NEW YORK, Sept. 18, 2000 CBS OPEC nations are trying to regain profits they lost when oil prices dropped to $11 a barrel in '98. (CBS) As the U.S. braces for a high heating prices this winter and Europe reels from a wave of fuel protests, oil prices hit their highest price Monday since the 1991 Gulf War.

NYMEX crude oil futures struck $37 a barrel on Monday afternoon amid growing tensions in the Middle East and as Saudi Arabia signaled it would wait to see the impact of OPEC's latest output increase before taking further steps to rebalance the market.

Crude for October delivery has advanced $1.08 or 3 percent on the day, gaining amid fears of supply disruptions after Iraq renewed last week allegations that Kuwait was stealing its oil.

Over the weekend Iraqi President Saddam Hussein warned fellow OPEC member states against pressure mounted by "superpowers" on producers to knock down blazing prices.

Kuwait said on Sunday that Iraq posed a real and present threat to the vital oil-rich Gulf region and called for serious international steps to contain its former occupier.

Defense analysts say the chances of a clash between Iraq and western powers are growing, especially as the U.S. presidential election campaignwhich Saddam might try to influenceheats up. The White House has reportedly prepared several contingency plans on possible moves by the Iraqis.

Crude for October delivery has risen $5 a barrel since the NYMEX contract started as front month on August 23. Since the start of the year, NYMEX crude oil prices have risen more than $11 or about 45 percent.

Meanwhile, the wave of fuel price protests sweeping through Europe regained momentum Monday after a weekend lull, while shaken governments scrambled to limit the political fallout.

Monday's protests centered on Scandinavia but blockades sprang up at the Spanish port of Barcelona and in Slovenia, while Israeli truckers threatened to stage their own demonstrations Tuesday.

Britain is still recovering from days of fuel protests that dried up petrol supplies at most filling stations and forced the government to take emergency action to get blockaded gas shipments moving.

This winter, heating oil prices in the Northeast are expected to rise by at least 20 percent. In the Midwest, where heating oil is not widely used, gas prices are expected to be the biggest problem.

Stock markets were lower Monday, partly because of the rising oil prices, which pose an economic threat because so many industries depend upon gasoline, and rising gas prices can cut into profitability.

Some fear the rising prices could cause a recession.

http://cbsnews.cbs.com/now/story/0,1597,234333-412,00.shtml

-- Martin Thompson (mthom1927@aol.com), September 18, 2000