Oil prices soared nearly four dollars per barrel on Tuesday, September 11, in London after two planes crashed into the two World Trade Center twin towers in New York and two explosions rocked the Pentagon.
The US oil market was not yet open when news broke that two airplanes had crashed into the two towers, starting the blazes. In London a barrel of North Sea Brent crude for October delivery was selling at $30.10 in frantic trading compared with a price of $27.26 before the crashes.
With Middle Eastern terrorists strongly suspected as being behind the attack, and the spectre of retaliatory sanctions in the air, oil prices are almost certain to remain sharply higher for the foreseeable future, said oil economists.
"A lot of people are speculating that Iraq may be behind the attack — they certainly don't believe that the Syrians or Libyans could be the perpetrators — and if oil supplies are cut off (from the Middle East) there will be a real demand/supply deficit," said an oil analyst who would only comment on the condition of anonymity.
While the analyst said he expected the oil price to come off a little after the reaction, he nonetheless said he was abandoning his year-end $24 price target for a barrel of Brent crude. "The fact that the Middle East seems to be involved at this point adds froth to a market that already has strong fundamentals," he added.
French oil analyst Jean-Francois Giannesini pointed out that member countries of the Organization for Economic Cooperation and Development (OECD) had 50 days of oil stocks as well as whatever stocks are on boats.
The head of weekly oil magazine Petrostrategies, Pierre Terzian, said that the increase in the price of oil was moderate given the circumstances, indicating that the market participants do not expect an eruption of hostilities that would interrupt oil supplies following the attacks in the US.
He said: "If the market really believed in a large-scale eruption of hostilities, the price of crude (oil) would have soared well over 40 dollars." Terzian said that the jump in oil prices was more a "precaution and the market is keeping a cold head." ― (AFP, London)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)
