Benchmark U.S. Crude Surges Past $32 a Barrel on Mideast Anxieties

Oil prices surged above $32 a barrel today on profound worries that the United States and Iraq are headed toward a military confrontation.

The price of the benchmark U.S. crude oil was 83 cents higher, at $32.05 per 42-gallon barrel, in afternoon trading on the New York Mercantile Exchange, the world’s leading petroleum market.

Crude oil futures prices have risen nearly 40% since Iraq invaded Kuwait on Aug. 2, as the elimination of 4 million barrels daily of Iraqi and Kuwaiti oil from world markets tightens supplies.

Even the prospects of increased production by other nations are waning. Analysts said the needs of foreign military forces in Saudi Arabia could devour any increases by that nation, the world’s largest producer.

“The fact that the market blew through the $30-a-barrel level Wednesday gave rise to the feeling that prices have much higher to go,” said Tom Bentz, trading director at United Energy Inc. in New York.

“If there’s any kind of military conflict, prices could go to $40 or $50 a barrel,” the trader said.

In early trading on the New York Mercantile Exchange, unleaded gasoline for September delivery surged 5.14 cents over Wednesday to $1.0925 a gallon.

Home heating oil was up 4.25 cents, to 95.60 cents a gallon.

Peter Beutel, vice president of Merrill Lynch Futures Inc. in New York, said a fire at a Shell Oil Co. refinery in Deer Park, Tex., also was a factor in the rise of gasoline prices, given that U.S. refineries are operating near capacity.

On the European cash market, the United Arab Emirates’ Dubai Light--the key OPEC crude from the Middle East shipped mainly to the Far East--was up 25 cents at midday to $29.90 a barrel. It had shot up $3.30 a barrel Wednesday.

Britain’s widely traded North Sea Brent gained 40 cents, to $31.95 a barrel.

On the U.S. Gulf Coast cash market, West Texas Intermediate had added 75 cents over Wednesday to $31.75 a barrel.

In Washington, the nation’s top antitrust prosecutor said today that he had summoned the major oil companies for talks to determine whether they used illegal tactics to drive up gasoline prices after Iraq’s invasion of Kuwait.

“I have called the major oil companies and requested that they come in on a one-by-one basis to meet with the staff and on several occasions with me,” said Assistant Atty. Gen. James Rill, who heads the Justice Department’s antitrust division.

Already, representatives of three major oil companies and two independent marketers have met with some of the 10 antitrust officials working on the inquiry, Rill told reporters at the Justice Department.

The purpose of the meetings is to have the company representatives explain the industry’s price practices, “the circumstances of the sharp increases in detail and the reasons why those increases have occurred,” he said.