Will Oil Be Weapon In Mideast War?

The Mideast crisis has driven the price of oil skyward and one oil-producing nation - Iraq - is urging urged Arab countries to use oil as a weapon to pressure the United States to force Israel to withdraw its forces from Palestinian areas.

The Iraqi proposal has generated very little enthusiasm among oil-producing states, however.

The price of oil is close to $27 a barrel. That's a six-month high, and with two-thirds of the world's oil reserves held in the Middle East, traders fear any spreading unrest could hit the markets severely.

Iraq said on Tuesday it was ready to punish the U.S. for its support of Israel by cutting off oil supplies if fellow exporter Iran did as well.

Iraq's acting foreign minister Humam Abdul-Khaleq Abdul-Ghafur took heart from comments by Iran, which said earlier that an embargo could be very effective but would depend on collective action by Islamic states, invoking memories of the 1973 oil crisis.

Iran, which has not exported oil to the United States since 1995, did not expressly support Iraq's idea. Some other Arab oil exporters reject the idea as counter-productive.

Abdul-Ghafur said Iraq hoped that "all Arab oil producing countries will take part in the embargo."

Israeli forces advanced into more Palestinian areas of the West Bank on Tuesday in retaliation for a wave of suicide bombings, provoking a wave of criticism from the Islamic world.

Some other key exporters reacted tepidly to Iraq's call at a meeting of the Organization of the Islamic Conference in Malaysia.

Kuwait, which only last week appeared to reconcile its differences with Iraq over the 1991 Gulf War, called the proposal "impossible."

A delegate from the Gulf exporter said any embargo would hand world market share to non-Muslim producers and drive revenues down.

"How can we support our Palestinian brothers if we do not have revenues?" said the Kuwaiti delegate.

Saudi Arabia and other major producers of the Organiztion of the Petroleum Exporting Countries (OPEC) have made clear they have no intention of repeating the 1973 embargo which wreaked economic chaos on the industrialized world.

The United States consumes nearly two-thirds of Iraqi oil exports, which are now running at 1.6 million barrels per day.

Iraqi oil, currently sold under a U.N. oil-for-food program, accounts for about five percent of the 20-million barrels consumed by the United States every day.

Earlier on Tuesday, Iraqi newspapers backed a call from the ruling Baath party for the use of the oil embargo weapon against countries supporting Israel on its campaign against the Palestinians.

"Let us use this almighty weapon without waiting any more to assure them that we will not keep silence toward their savage crimes," the official al-Iraq newspaper said.

"Let us take serious and active steps in this direction and we will see how they kneel down or retreat from their arrogance and negligence of the Arab stance," the paper said in a front-page editorial.

The 1973 Arab oil embargo quadrupled oil prices and badly damaged the U.S. economy, but analysts said a repeat of that tactic was highly unlikely with producers' economies increasingly dependent on oil revenues.