War against Iraq could raise oil prices above $40

Press Trust of India
Beijing, February 23

If a possible United States-led war against Iraq does not end quickly, oil prices in the world market could touch a high of $40 per barrel, a Chinese petrochemical economic expert has said.

"A prolonged war in Iraq would severely affect oil supplies from the Middle-east region and push crude oil prices to $35 to $40 per barrel or even higher," Vice Chief Engineer of the China Petrochemical Economic and Technology Institute Zhu predicted.

Zhu pointed out that Iraq after having learned the lessons from 1991 Gulf war would involve the US in a long war.

"If Iraq sets its oil wells on fire, entangles the US troops into street-fights or launches missiles and spreads the war to neighbouring countries, the situation in the region will deteriorate," Zhu was quoted as saying by China's official media.

With the war clouds looming large the oil prices have already risen, Zhu said adding, that even if the US launched an early attack and finish it quickly, the oil prices would not drop immediately.

"The price may be hiked to $35 to $40 in a month after the war begins", he said adding, that prices would drop to a normal price of $25 and $26 in the second or third quarter and set an yearly average of about $27.

A quick end to the war would not damage oil production in the Middle East even as US strategic oil reserves have reached a historically high level, he said.