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Iraq ignites crude markets
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December 16, 1998: 6:24 p.m. ET
Brent, New York light sweet oil prices both leap ahead of allied air strike
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NEW YORK (CNNfn) - Oil prices gushed higher Wednesday, surging off their 12-year lows of last week on the back of renewed tension between the United States and Iraq.
February contracts for Brent crude were up 77 cents, or 7.25 percent, in overnight London trading at $11.36. The January contract closed at $11.00, also up 77 cents, after soaring as high as $11.25 during the day.
In New York, the February contract was up 75 cents per barrel at $12.70. The January contract had closed at $12.36, up 81 cents.
U.S. and British forces launched a substantial military strike on Iraq Wednesday, one day after the United Nations' chief weapons inspector issued a report saying that Baghdad had resolutely failed to cooperate with mandated weapons inspections.
Oil stocks also were firmly higher on European bourses. In Paris, Elf (PAQ) closed 21 francs higher at 642 while Total (PFP) climbed 17 francs to 590. In London, British Petroleum (BP) ended up 21.5 pence at 877.
Peter Gignoux, head of Salomon Smith Barney's petroleum desk in London, said political developments in the United States are making the oil market nervous.
Wednesday also saw options expire for U.S. crude, a technical factor that Gignoux said also contributed to the rally.
However, at least one analyst played down the impact of an upcoming meeting in Madrid of leading oil producers Saudi Arabia, Venezuela and Mexico, saying that he couldn't "really see that being a reason for the rise." 
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