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Oil prices rocket skyward
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September 11, 1996: 11:07 a.m. ET
Events in the Middle East, worries about supply drive prices to new highs
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NEW YORK (CNNfn) -- Oil prices soared to their highest levels since the conclusion of the Gulf War on Wednesday as traders assess the impact of escalating tensions in between the U.S. and Iraq.
Light sweet crude jumped 74 cents to $24.86 a barrel in early New York trading Wednesday. In London, the October contract for Brent North Sea crude soared 72 cents to trade at $23.60 a barrel, a new post-Gulf War high.
The run-up was fueled by news Iraqi surface-to-air missile batteries fired two SA-6 anti-aircraft missiles at a pair of U.S. Air Force F-16s patrolling near Saddam Lake in Iraq's northern no-fly zone.
These missiles were guided by a "two second burst" of targeting radar preventing U.S. response with radar-seeking missiles.
Pentagon sources told CNN an Iraqi aircraft had also violated the southern no-fly zone Wednesday morning, but left before they were fired upon by U.S. planes guarding the area.
Iraq, whose exports have been under a United Nations embargo since it invaded Kuwait in August 1990, was to be permitted a limited renewable oil sale, worth $2 billion over six months, to pay for essential food and medicines.
But the United Nations suspended that deal after Iraq made moves against Kurds in the past several weeks.
In anticipation of the sale of Iraqi oil, several refineries had let their stocks run low. That further stoked the rally in oil prices, as the refineries were forced to buy at higher prices to satisfy standing orders.
Add in the northern hemisphere's approaching winter months and you have the recipe for a major price squeeze.
Since the end of August, October light sweet crude has risen more than $2.50 a barrel in New York trading. That's an increase of more than ten percent.
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