|09/15 08:10 Crude Oil Rises on Persian Gulf Tension, Gulf of Mexico Storm
By Jon Hurdle
London, Sept. 15 (Bloomberg) -- Crude oil rose more than 2 percent as renewed tensions in the Persian Gulf and a tropical storm in the Gulf of Mexico raised concern about supply at a time when prices are near a 10-year high.
The threat to output increased after Iraq accused Kuwait of taking oil from its reserves in a border zone, while the U.S. government warned a tropical storm over Mexico's Yucatan Peninsula may become a hurricane in the Gulf of Mexico, a key area for U.S. oil and gas production.
The jump in prices ``gives you an idea of just how sensitive the market is,'' said Bruce Evers, an analyst at Investec Henderson Crosthwaite.
Brent crude oil for November settlement rose as much as 75 cents, or 2.3 percent, to $33.04 a barrel on London's International Petroleum Exchange. U.S. crude oil for November delivery rose as much as 82 cents to $34.89 in electronic trading on the New York Mercantile Exchange.
Oil prices this week are little changed, even after the Organization of Petroleum Countries on Sunday agreed to its third output increase since March, a boost of 800,000 barrels, or 3.2 percent, to daily quotas. Oil this year has jumped 40 percent.
Iraq said Kuwait had been drilling in the border zone between the two countries to draw oil from Iraqi reserves. Kuwait said Iraqi planes flew close to the Kuwait and Saudi Arabian borders, violating a no-fly zone.
As tension mounted, U.S. Secretary of State Madeleine Albright warned of an ``appropriate'' action if Iraq attacks or threatens its neighbors.
The U.S. has ``a credible force in the region and we are prepared to use it in an appropriate way,'' she said.
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