02/24 22:14
Crude Oil Rises as U.S. Presents UN Resolution to Disarm Iraq
By Rajat Bhattacharya
quote.bloomberg.com
Tokyo, Feb. 25 (Bloomberg) -- Crude oil rose as much as 1 percent as the United Nations Security Council prepared to consider a resolution that may lead to an attack on Iraq, which could disrupt shipments from the Middle East.
The U.S. and U.K. want the council to vote within about two weeks on the resolution, which says Iraq lost its ``final opportunity'' to prove that it has rid itself of weapons of mass destruction. Iraq, which pumps about 3 percent of the world's oil, could be less than a month away from war, traders said.
``We're reaching the diplomatic end-game,'' said Christopher Burton, a senior partner at E Street Trading LLC, a commodity futures brokerage in Long Beach, California. Crude oil ``prices are still building and $40 is reasonable to expect even before the bombs start flying.''
Crude oil for April delivery rose as much as 36 cents to $36.84 a barrel, and traded at $36.74 at 12:01 p.m. Tokyo time in after-hours electronic trading on the New York Mercantile Exchange. Prices rose 2.5 percent yesterday and are up 79 percent from a year ago.
Military action would coincide with low supplies in the U.S., the world's biggest oil consumer. U.S. crude oil inventories this month fell to the lowest level since 1975.
Iraqi leader ``Saddam Hussein's refusal to comply with the demands of the civilized world is a threat to peace,'' U.S. President George W. Bush said yesterday. ``It is a threat to the security of our country.''
Two Weeks
The Security Council will probably make a decision on Iraq after ``a good period of two weeks, or maybe a little more,'' U.K. Foreign Secretary Jack Straw told reporters in Brussels yesterday.
The UN should vote to authorize military action after Hans Blix, the chief UN weapons inspector, reports March 7 on the status of Iraq's weapons program, U.S. Secretary of State Colin Powell said this week in Tokyo.
The resolution ``could bring us closer to war,'' said Phil Flynn, a senior energy trader at Alaron Trading Corp. in Chicago. ``If it passes prices will soar. If it doesn't there will probably be a bit of a sell-off, but it will be short-lived, because the U.S. is set on taking action.''
A veto from one of the permanent members would scuttle any attempt to adopt a new ruling. China, France and Russia oppose war plans by the council's other two permanent members, the U.S. and U.K.
``A second resolution is not necessary,'' French Foreign Minister Dominique de Villepin said at a news conference in Brussels yesterday. ``We cannot accept a second resolution that would imply that military action is inevitable, which we don't yet see as practicable.''
France released its own proposals yesterday, calling for tougher weapons inspections, increasing the number of monitors and setting deadlines in stages to determine whether Iraq is disarming.
Weapons
UN resolutions have demanded that Iraq rid itself of chemical and biological weapons and reveal programs to develop nuclear arms. The country has been subject to UN sanctions since its invasion of Kuwait in 1990.
Bush has ``very little hope left'' that diplomacy will work to disarm Iraq, his spokesman, Ari Fleischer, said.
``We have listened carefully to the many voices calling for more time,'' U.S. Ambassador John Negroponte told the Security Council yesterday. ``But 11 years, 10 months and 23 days is more than enough time for Saddam Hussein to prove that he has disarmed.''
The U.S. and U.K. are deploying about 225,000 troops in the Persian Gulf region in preparation for an invasion of Iraq.
The U.S. began flying training missions for B-52 bombers over the region to help crews get familiar with the area, the U.S. Central Command, which controls the nation's forces in the region, said in an e-mailed statement.
Blix ordered Iraq to begin destroying its Al Samoud-2 missiles in the Baghdad area by March 1 because they may exceed the 150-kilometer (93-mile) range set by the UN in 1991, according to a copy of a letter delivered to Iraq that was obtained by Bloomberg News.
Iraq's Refusal
Hussein denied Iraq has missiles that exceed United Nations limits and challenged President Bush to a televised debate, CBS news reported, citing an interview with the Iraqi leader.
``We do not have missiles that go beyond the proscribed range,'' Hussein said in the three-hour interview, according to CBS.
``I am ready to conduct a direct dialogue with your president,'' Hussein told CBS. ``This will be an opportunity for him, if he's committed to war, this will be an opportunity to convince the world.''
The White House dismissed the Iraqi president's comments.
``It's just further evidence that Saddam Hussein has no intention of disarming,'' said White House spokesman Scott McClellan. ``He's continuing to defy the UN Security Council.'' |
