Oil surges to 12-year high as war looms

CRUDE oil surged to a 12-year high for the second straight session as the US and Britain continued preparations to disarm Iraq

President George W Bush, seeking to build support for an attack, said the overthrow of Iraqi leader Saddam Hussein would foster stability in the Middle East. An attack would come with US oil inventories close to a 28-year low and petroleum demand rising because of unusually cold weather. “There’s been a deep freeze in the world’s biggest consuming nation for the past two months, which is draining stocks. Prices should be higher,” said Mike Fitzpatrick, a broker at Fimat USA Inc in New York.

Crude oil for April delivery was up $1.95, or 5.2%, at $39.65 a barrel as of 11.14am on the New York Mercantile Exchange. Oil rose to $39.99 in earlier trading, the highest price since October 12, 1990, when Iraq’s occupation of Kuwait led to the cut-off of exports from both nations. Oil is heading toward its biggest weekly gain since April.