Mid East tension fuels fears of oil price rise

TENSION IN the Middle East - with growing conflict between Israel and the Palestinians - is disrupting the supply of crude oil, and pushing up international fuel prices.
This, according to Standard Bank economist Dr Henry Flint, is certain to see the price of the resource rise sharply in the short-term before settling at an expected US$22/barrel to US$28/b.
"For the immediate future," he said, "oil prices will continue to be influenced by expectations that the global economy is recovering after September 11 and Opec supply management."
This is one factor in the rising price. The other factor exerting additional upward pressure on prices, according to Flint, is that rising tension in the Middle East, and the possibility of a 1993/94-style oil embargo, recently proposed by Iran and Iraq.
"With prices currently at US$24/b and rising," he said, "Opec will have to manage supply conditions to stabilise prices and to prevent both further sharp increases and declines."