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Oil up on new Iraq threat
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December 29, 1998: 6:49 a.m. ET
Brent crude prices surge 4 percent in London after U.S.-Iraq air skirmishes
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LONDON (CNNfn) - Oil prices spiked up in early trade in London Tuesday on the back of renewed tension in Iraq. But analysts warned the rise would be short-lived.
February contracts for Brent crude surged 32 cents to $10.46 - a rise of 4 percent - after traders returned from Monday's Boxing Day holiday.
The latest U.S.-Iraq clash, a missile exchange over northern Iraq Monday, was seen helping prices. Further support came from plunging temperatures in the United States.
Peter Gignoux, manager of Salomon Smith Barney's petroleum desk in London, said gains in Nymex contracts in New York Monday also helped Brent prices. "London is playing catch-up," he said.
But T. Hoare & Co. oil analyst Charlie Sharp warned that the commodity's weak fundamentals had not changed.
During the run up to the last military confrontation between the United States and Iraq earlier this month, oil prices leaped on the threat of military action in the Gulf. But they stablized once it became clear that the U.S.-U.K. bombing raids were not hitting Iraqi oil exports.
"It's a fairly significant jump," said Sharp. "But there is no fundamental reason for it to go up. There was a little blip before when there was the threat of action. But last time there appeared to be no reduction in output from Iraq during the four days of military conflict."
Oil supplies in the United States are high and even a severe winter between now and the spring would not reduce them sufficiently to hit the price of oil, said Sharp. 
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