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UPDATED: 21:02, August 20, 2004
Oil prices soar toward 50 dollars a barrel amid concern over Iraq
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Oil prices soared to new record high on Friday when US crude crept steadily toward the 50 dollars a barrel mark, driven by worsening security situation in Iraq.

At the New York Mercantile Exchange, US light crude for September set a record 48.98 dollars a barrel before easing to 48.63 dollars on the day. Meanwhile, at London's International Petroleum Exchange, the Brent crude-oil futures contract hit a new record at 44.50 dollars a barrel.

Analysts said concerns were focused on a three-week clash in Iraq between radical cleric Muqtada al-Sadr and coalition forces in the holy city of Najaf.

Iraqi militiamen has repeatedly threatened to target the country's vulnerable oil infrastructure, especially the pipeline network.

The confrontation in Iraq is just one of a series of factors that has driven oil prices to record highs this year.

Analysts also cite the fear of more terror attacks in Saudi Arabia, the world's largest producer, and the battle by Russian oil giant Yukos against bankruptcy as other factors behind the price surge.

In addition, there is little sign yet that high prices are slowing the demand for fuel that is fed by global economic growth.

Rodrigo Rato, director of International Monetary Fund, was quoted on Friday as saying that he still expected world growth this year of 4.6 percent. Oil demand growth this year is running at a 23-year high of 2.49 million barrels per day (bpd) on the 83-million-bpd world market, he added.

Also on Friday, Organization of Petroleum Exporting Countries (OPEC) President Purnomo Yusgiantoro expressed concern over the soaring price of crude oil in international market and pledged to intensify communication among OPEC members to curb the price.

He said OPEC members will meet in Vienna on Sept. 14 to decide "strategic moves" to curb the soaring oil price.

Yusgiantoro, who is also Indonesian Energy Minister, said the upcoming conference will involve OPEC members, non-OPEC countries as well as leading oil producers.

"I hope there will be no more hike in oil price. We will do our utmost to prevent oil price from further climbing," he told a press conference at his office.

Meanwhile, a former OPEC president said a lack of investment means that OPEC production capacity has not increased for 30 years.

"In 1973, at the time of the first oil crisis, OPEC had production capacity of 31 million barrels per day, and it is the same today," said Sadek Bussena, a former Algerian energy minister.

"That means that we have not invested sufficiently even though reserves of oil are available. They are big and they are enough to cover demand for decades to come," he added.

But the reserves were in countries "in regions which are not stable and where investment is not carried out in the right way."

He urged the international community to assist investment in these countries in terms of geopolitics and the economy and "to avoid being alarmed" each time there is trouble in a producing country.

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