Oil Prices Surge on Mideast Violence

As violence exploded in several parts of the oil-rich Middle East Thursday, so did crude oil prices on world commodity markets.

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U.S. crude jumped almost $3 to $36.20 a barrel in late-morning trading on the New York Mercantile Exchange and had briefly gone above $37 per barrel, Reuters reported. In London, Brent crude was up $3.26 to $35.05 per barrel on the International Petroleum Exchange, according to another Reuters report.

Both exchanges had registered slight dips in earlier trading on ideas that a U.S. Department of Energy report would show that inventories rose last week, rather than falling as the American Petroleum Institute reported Wednesday. However, as reports of various violent acts in Middle Eastern countries began to come in, prices soared as buyers – fearing output could be halted by the tensions – began frantically buying up oil, several news agencies said.

In Israel, an already volatile situation continued to escalate as Israeli troops attacked Palestinian leader Yasser Arafat’s compound in the Gaza Strip as retaliation for the murder of two Israeli soldiers by a Palestinian mob, the Associated Press reported.

Four U.S. Navy sailors were reported killed, 30 more injured and 12 were reported missing after the USS Cole, a Navy destroyer, was hit by a small boat carrying explosives in an apparent terrorist attack, the Associated Press also reported. The ship was refueling in Aden, Yemen when it was struck by the craft, tearing a large hole in the side, the report said.

Earlier Thursday, Bloomberg reported that Iraq, OPEC's fourth-largest oil producer, threatened to suspend oil exports if the United Nations does not change billions of dollars from oil sales into euros. The money is held in a UN-controlled bank account. The Iraqis consider the dollar to be "the currency of an enemy state," an Iraqi official said in the report.