Oil and War

More than the impending conflict with Iraq is driving up prices. A quick victory might bring them down, but a lot could go wrong

Oil shock. That's the worry of executives, consumers, and world political leaders alike as the Bush Administration prepares to launch a military campaign to depose Iraqi President Saddam Hussein. For the moment, the energy markets show every sign of giving in to such dread. With global inventories reaching dangerously low levels, crude oil approached the feared $40-per-barrel mark in the trading week of Feb. 24-28, while futures markets gyrated in some of the wildest action traders had ever seen. Heating-oil, gasoline, and natural-gas prices in the U.S. also hit near-record highs before falling back a bit. "There has been genuine chaos," says Peter A. Gignoux, head of the oil desk at Citigroup (C ) in London.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.