Oil flows over £30 a barrel

WORLD OIL prices burst through the psychologically important $30-a- barrel mark today as increasing jitters over a military strike on Iraq underpinned the market.

The price of a barrel of US crude oil surged 59 cents to $30.20 in Asian markets. Brent crude was expected to follow when trading on the London International Petroleum Exchange opened today. The latest gains extended last week's strong rally which saw the price of Brent rise to $28.95, its highest in almost a year.

The oil price is being boosted by concerns over Middle East crude supplies should a full-scale attack on Baghdad begin.

Lawrence Eagles, head of commodity research at brokers GNI, said: 'It is not the loss of Iraqi oil during a possible military strike against Iraq that matters, but the effect that would have on regional oil policies. The loss of less than one million barrels per day of Iraqi oil can easily be absorbed, but it is the danger that supplies from elsewhere are interrupted that is the issue.'

Economists fear that soaring oil prices could hamper the global economic recovery, which is already fragile and painfully slow.

Saudi Arabia has offered leading oil companies some concessions on commercial terms in the landmark opening of its gas sector. The companies, including ExxonMobil and Royal Dutch/ Shell, submitted final proposals in July to end months of deadlock over the terms.