Oil prices surge after Saddam announces cut in crude exports

LONDON -- Oil prices surged Monday in a fresh wave of anxiety after Iraqi President Saddam Hussein cut off crude exports to demonstrate support for the Palestinians in their struggle with Israel.

Saddam announced that Iraq would suspend oil exports starting Monday for 30 days or until Israel withdraws from Palestinian territories.

His unilateral cutoff could put more pressure on other Arab leaders to move against Israel in retaliation for its offensive.

Iranian supreme leader Ayatollah Ali Khamenei on Friday urged Islamic nations to stop shipping oil for one month to countries with close relations with Israel. Libya announced Monday that it supported the call.

Both nations are OPEC members.

Despite their earlier expressions of support for an oil boycott, Iran and Libya were unlikely to join with Iraq, said Jan Stuart, head of research for global energy futures at ABN Amro in New York.

Iran's economy is too weak to go for long without precious oil revenue, and Libya is worried about jeopardizing its slowly warming ties with the United States, Israel's main backer, Stuart said.

Although OPEC hadn't received formal notice from Iraq about its embargo, U.N. oil monitors said the transfer of oil from Iraq to the Ceyhan loading terminal in Turkey ceased at midmorning Monday, U.N. spokesman Fred Eckhard said in New York.

At Iraq's other loading terminal, Mina al-Bakr in the Gulf, one vessel completed loading on Monday and two other vessels were waiting to be loaded. It wasn't clear if they would take on their oil cargo, Eckhard said.

Iraq, which has a daily production capacity of 2.3 million barrels, exports about 1.8 million barrels a day under the close supervision of the United Nations. Iraq also is believed to export an estimated 250,000 barrels a day illegally, via pipeline to Syria and by truck to Turkey.

Iraq's main customers are refiners and oil trading firms in the United States and Europe.