The sharp price rise was triggered by the Palestinian suicide bombing in Haifa on 4 October and particularly by the Israeli response: the decision to launch a strike on Syria raised fears of a wider regional conflagration and the disruption of oil supplies. Prices weakened marginally from the highs of the bombing’s immediate aftermath as Damascus decided on a restrained response.

While the newspapers are full of Iraq’s instability, US and Iraqi officials are showing signs of confidence about the recovery of oil exports. Mohammed al-Jibouri, head of the State Oil Marketing Organisation (SOMO), met oil company representatives in London in early October to discuss increasing export volumes. US military spokesman Carl Stock told reporters in Washington on 6 October that output had reached 1.9 million barrels a day (b/d), although exports are constrained by the continued closure of the Kirkuk-Ceyhan pipeline.

Periodic fears about the reliability of Nigerian output resurfaced when a general strike was called for 9 October, to protest at fuel price rises. State-owned Nigerian National Petroleum Corporation is in talks with oil workers unions to avoid further disruption to production. The sense of the turmoil in the local hydrocarbons industry was increased with the resignation on 1 October of Rilwanu Lukman, President Obasanjo’s special adviser on petroleum and energy, reportedly over discontent with oil policy.

Strong US stock builds in recent weeks have exerted downward pressure on prices, although analysts point out that seasonal comparisons are misleading because the corresponding period in 2002 was characterised by particularly low inventories. US crude stocks increased 1.9 per cent to 286.2 million barrels in the week to 3 October.