Oil Rises as Hope Dims for Quick End to War

Oil prices advanced worldwide today as concern increased that the war in the Persian Gulf may last longer than expected.

Euphoria generated by the U.S.-led bombing of Iraq continued to abate. Over the weekend, Iraq lobbed a series of missiles at Saudi Arabia and Israel.

“People are reconciling themselves to the fact that this is going to be a three-month war rather than a three-day war,” said James Fiedler, a vice president at E.D.F. & Man International Inc., a commodity futures trading concern in New York.

Oil prices, which fell below $20 a barrel Friday after the seemingly successful opening stages of war, were climbing today. On the New York Mercantile Exchange, crude for next-month delivery was up more than $2 at $21.30 a barrel.

“This is not a real serious move,” said Eugene Peroni, an analyst with Janney Montgomery Scott in Philadelphia. “Oil prices are still way down from the $40-a-barrel” peak of mid-October.

In overseas energy markets, the March contract for North Sea Brent Blend, an important grade of crude oil traded in Europe, stood at $19.25 a barrel in London, up $1.05 from Friday. In late Tokyo trading, Brent reached a high of $19.20 per barrel before falling back to $18.75.

Last week’s optimism was tempered with concern that the war could be prolonged. But energy analysts said traders were not as focused on the minute-by-minute developments in the gulf war, particularly since Iraq’s main offensive weapon used to date, the Scud missile, has so far proven to be fairly inaccurate and not particularly threatening.

Traders are viewing Iraq’s offensive as “a desperate act of terrorism rather than” something of military significance, Fiedler said.