Oil Surges as Bush Takes Tough Stance on Force in Mideast

Oil prices soared Friday, buoyed by sentiment that President Bush’s visit to the Mideast had bolstered international support for the use of force in the Persian Gulf.

January crude futures on the New York Mercantile Exchange settled at $31.90 a barrel, up $2.27 on the day and up nearly 6.7% from the $29.78 close last Friday.

Analysts said oil prices were likely to remain firm next week as foreign ministers attend a United Nations session to discuss a resolution authorizing force to oust Iraq from Kuwait.

“Bush’s tough talk in the Mideast and next week’s U.N. meeting are making this market nervous to the upside,” said Tom Bentz, an analyst with United Energy Inc.

Bush, visiting troops in Saudi Arabia on Thursday, said he felt a U.N. resolution on force should be approved before Nov. 30.

“We’re getting tired of the status quo and so is the rest of the world,” Bush told reporters after two hours of talks with Egyptian President Hosni Mubarak, Washington’s closest Arab ally.

Prices remained firm even after Soviet leader Mikhail S. Gorbachev said Moscow was not committed to future military action against Iraq. U.S. officials say Soviet cooperation is crucial to Bush’s plan to get a resolution through the United Nations.

No exact date has been set for the next session of the Security Council.

U.S. prices caught up with gains made in London on Thursday, when markets here were closed for Thanksgiving.

“We’re playing catch-up after London rose on Bush’s ultimatum in Saudi Arabia,” said Brian Tagler of Lehman Bros.

Also boosting oil was news Thursday that Britain would send 14,000 more troops to the gulf, calming speculation that Margaret Thatcher’s resignation as leader of the Conservative Party might signal a softening of Britain’s determined stance against Iraq.

“Britain’s decision to send troops in the wake of Thatcher’s resignation was bullish because it meant they’re still as hawkish,” Tagler said.

Traders said Friday’s activity was extremely light, with many participants away on long Thanksgiving holiday weekends.

In London, January futures for the benchmark crude North Sea Brent Blend rose on the International Petroleum Exchange to $30.50 a barrel from $29.99 on Thursday.

On the NYMEX, unleaded gasoline for December delivery added 3.45 cents to 82.40 cents a gallon, while spot heating oil rose 3.42 cents to 88.66 cents a gallon.

Also Friday, former Saudi Oil Minister Sheik Ahmed Zaki Yamani said a short, destructive war over Kuwait early next year could result in oil prices averaging $71 a barrel in the first quarter.