- The Washington Times - Saturday, September 15, 2001

Crude oil prices rose more than 5 percent yesterday to close at nearly $30 per barrel on concerns that a U.S. retaliation against a Middle Eastern country for Tuesday's terrorist attacks could disrupt oil supply.
Crude prices rose yesterday after President Bush promised Americans to find and punish those responsible for the attacks against the World Trade Center and the Pentagon. Crude prices rose immediately after the attacks, but then eased back after OPEC (Organization of the Petroleum Exporting Countries), a group of 11 nations that supplies 40 percent of the world's oil, vowed to keep supplies steady.
Oil industry observers said the price increases are uncalled for, as oil supply worldwide is adequate and demand has fallen. Still, uncertainty about how the United States and its allies will respond to the attacks will likely lead to market volatility in the coming days, they said.
"Obviously the markets are very nervous because there are concerned about what could happen," said John Felmy, chief economist with the American Petroleum Institute. "So you see this kind of short-term swing."
The last time U.S. gas prices rose as result of a wartime situation was in 1990 during the Persian Gulf war, when prices jumped about 30 cents a gallon, said Peter Horrigan, president of the Mid-Atlantic Petroleum Distributors Association.
"But this is a totally different scenario," he said. "We don't expect that to happen."
Earlier this week in some parts of the country there were reports of some gas stations charging upward of $5 per gallon of gas. The Energy Department condemned the scattered increases and warned station owners of possible prosecution. Major gasoline wholesalers, too, reacted quickly to the reports, insisting that increases were not warranted.
Crude oil closed at $29.07 on the Brent market yesterday, up from $28.14 the previous day.
"Prices obviously are probably going to be a little high because of the uncertainty," said Kyle Cooper, vice president and energy analyst with Solomon Smith Barney in Houston. "But it should not be long term, and it should not be significant."
Mr. Cooper said the closure of many businesses Tuesday and the nearly three-day grounding of all airplanes have created lower demand for oil, which could help keep gasoline cheaper in the short term.
"There's insufficient reason that we should expect [the oil market] to perform one way or another," said George Gaspar, managing director of petroleum research for Robert W. Baird & Co. in Milwaukee. "I don't think there's any reason why prices should be up."
Once criticized for the 1973 Arab oil embargo in protest of U.S. support for Israel, OPEC has responded this time with pledges that the United States will have plenty of fuel.
Saudi Arabia, OPEC's top producer, said it would provide adequate supplies, as did Kuwait and the United Arab Emirates. Condolence messages from Iran and Libya, OPEC members who are subject to U.S. sanctions in connection with accusations of supporting terrorism, also helped eased concerns.
Only Iraq has not condemned the attacks. Iraqi President Saddam Hussein said Wednesday that the United States "reaped the thorns planted by its rulers" when New York and Washington came under attack.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide