Oil up after air raids

27 December 2007

The price of crude oil climbed on Boxing Day after the Turkish military stepped up its offensive against Kurdish separatists based in Iraq.

Growing tension between the Turkish government and the Kurdistan Workers Party PKK in the past few months has helped to sustain crude oil prices above the $90 a barrel mark, amid fears a widespread conflict would affect Iraqi oil shipments.

On Wednesday Turkish warplanes bombed eight suspected PKK targets across the border, causing a major reaction among traders.

US crude for February delivery climbed $1.84 to close at $95.97 (£48.34) a barrel, while Brent crude rose $1.24 to settle at $93.94.

Meanwhile, analysts are expecting the US Energy Information Administration's weekly update, which is scheduled to be published on Thursday, to show that the country's supplies of crude and heating oil have fallen further.

Stockpiles of crude oil in the US have declined for the past five weeks, helping to ensure worries about supply continue and to support prices.