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Crude oil hits $36 a barrel
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September 15, 2000: 4:14 p.m. ET
Oil prices soar despite assurances from Clinton that U.S. economy won't suffer
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NEW YORK (CNNfn) - U.S. crude oil futures soared over $36 a barrel near the close on Friday, a fresh ten-year high, despite President Clinton's assurances earlier in the day that high oil prices will not hurt the booming U.S. economy.
In late trading, U.S. light sweet crude for October delivery rose $1.78 to $35.85 a barrel after hitting a high of $36.10 on the New York Mercantile Exchange. London's benchmark Brent for November delivery gained $1.61 cents to $33.90.
Fresh tensions in the Middle East between Iraq and Kuwait and a brewing storm headed towards the oil producing Gulf of Mexico all conspired to push prices higher.
President Clinton said Friday he sees no threat of a recession in America in  the short term because of high oil prices.
"I will do everything I can to minimize any adverse impact on the American people," the president said. He spoke during a photo opportunity in the Oval Office with Indian Prime Minister Atal Bihari Vajpayee.
Last week in New York, Clinton expressed concern about oil prices. He said then that the price of oil was too high and said it would be harmful "if it's a cause of recession in any part of the world."
Speaking Friday, Clinton said he did not think there was a risk of a recession in America "in the short to medium term." He said the United States has made a major effort over the last 25 years to develop a more diverse economy, less vulnerable to oil price spikes.
"We have withstood this oil price spike very much better than we did when it happened before," the president said. "Now, what we need to do is watch the situation closely. The market is still sorting out what to do with the recent OPEC announcement, and I think there will be an evaluation of what the production schedules are -- who does what in the various countries, how quickly."
Clinton said the OPEC announcement and actions taken since then "are not enough, I think, for the market to sort out what it's going to do."
He urged Congress, in its last weeks in this year's session, to reauthorize the Strategic Petroleum Reserve. He also criticized lawmakers for failing to act on his proposals for energy tax incentives for businesses and individuals.
Clinton said he was "keeping all my options open" about how to deal with the oil price problem and was reviewing problems in specific areas of the country, such as the Northeast where many Americans heat their homes with oil.
"I'm spending a great deal of time on this," the president said.
Later, Lockhart told reporters Clinton is considering tapping the 600-million-barrel strategic reserve, but has made no decision. "Any decision like that will have to reflect what's going on in the marketplace," Lockhart said. "It's just not something you do on a whim, because you feel like doing it."
Tension in Middle East intensifies
The latest rally was triggered by Baghdad's allegation on Thursday that Kuwait was stealing oil from its fields in the south of the country. Kuwait denied the charge.
"There's concern that Iraq knows it's in a position that if it pulls its production off the market it would have significant implications on moving oil prices sharply higher," said Bruce Lanni, oil analyst at CIBC World Markets.
Iraq accused Kuwait of sabotage and theft of Baghdad's crude by drilling oil wells in a joint zone straddling the border. It said it would take unspecified measures against Kuwait.
"We haven't stolen anything," Kuwaiti Foreign Minister Sheikh Sabah al-Ahmad al-Sabah told Reuters. "If you take from your own land it can't be stealing," he said.
Iraq made similar oil-theft claims before marching into Kuwait on Aug. 2, 1990, which led to the Gulf War and international sanctions on Baghdad.
The United States quickly stepped into the fray after the latest volley of accusations, warning Iraq not to threaten its neighbors. It said it was ready to use forces based in the Gulf to retaliate if Iraq took such action.
"We do have a credible force in the region and are prepared to use it in an appropriate way at a time of our choosing," U.S. Secretary of State Madeleine Albright said.
In Europe, British and Belgian truck drivers and farmers headed home after days of nationwide protests against the price of fuel virtually paralyzed both countries.
But truckers angry at high prices continued protesting in Germany, Spain, Ireland and the Netherlands, and governments in the West said they would try to persuade OPEC to do more to ease crude prices.
Dealers said crude's gains were extended by the threat of a hurricane in the Gulf of Mexico, the source of one-fifth of U.S. domestic oil production and one-quarter of natural gas output.
The U.S. National Hurricane Center forecast a tropical storm over Mexico's Yucatan Peninsula would move to the southern Gulf of Mexico and turn into a hurricane in the next three days.
Crude prices, which retreated earlier this week on OPEC's vow to increase output, are back to within $1 of last week's high of $35.85, a level not seen since the Gulf War.
OPEC output rising or falling?
Rising Middle East tensions appeared to threaten to reverse action by major producers earlier this week to damp the price of oil.
The Organization of the Petroleum Exporting Countries, which includes both Kuwait and Iraq, agreed to hike official output by 800,000 barrels per day from October to tame runaway prices that have sparked fears of inflation and a slowdown in global economic growth.
OPEC said on Thursday it could raise output again if needed. Analysts point out that the cartel is pumping more than at any time in the past 20 years -- 29 million barrels daily -- and that only Saudi Arabia has any spare production capacity.
The International Monetary Fund warned on Thursday that the rocketing cost of oil posed a risk to next year's world economic outlook, saying a price of $30 a barrel could cut growth rates by 0.3-to-0.5 percentage points.
Meanwhile, oil companies in Britain backed down from planned petrol price hikes, after government ministers pointed out the insensitivity of their timing. The companies had begun implementing higher prices in the midst of a nationwide fuel crisis brought on by refinery blockades by disgruntled truckers and farmers protesting over hefty taxes on fuel.
Much of Europe has experienced widespread disruption and chaos this week because of protests over heavy taxes, which make fuel prices in the region the world's most expensive. 
--compiled from staff and wire reports
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