Oil Prices Soar on War Fears

Oil prices jumped nearly $3 a barrel Monday as the United States and Iraq took tough stances ahead of Wednesday’s face-to-face talks on the Persian Gulf crisis.

The upswing halted three straight days of declines, which were fed by hopes of peace in the Persian Gulf.

Iraqi President Saddam Hussein said Sunday that his troops were ready for “the mother of battles” to hold on to Kuwait.

Washington warned him that in three days the door would be shut for negotiations to avoid war.

“They (the U.S. and Iraq) cannot agree--they don’t speak the same language,” said a European oil trader.

Crude oil for delivery in February on the New York Mercantile Exchange closed up $2.75 at $27.65 a barrel, reversing Friday’s downturn that left prices at $24.49, the lowest since the day after Iraq invaded Kuwait.

Oil products also jumped, with unleaded gasoline for February shooting up 7.01 cents to 71.63 cents a gallon and heating oil rising 7.87 cents to 76.17 cents a gallon.

“If something happens, you won’t see any products coming out of the Mideast,” said Gerald Inc. analyst Mark Scullion, noting that cold weather was also boosting heating oil prices.

On Friday, oil prices tumbled more than $1 a barrel on news that Secretary of State James A. Baker III would meet Iraqi Foreign Minister Tareq Aziz in Geneva Wednesday.

The meeting will be the first high-level talks since the crisis began.