WORLD oil prices jumped yesterday after the United Nations put on hold an Iraqi oil for food exchange in response to Baghdad's military incursion into its northern Kurdish region.
October futures for international benchmark North Sea Brent blend ended a sharp 1.21 higher at $21.99 (£13.60) a barrel.
Oil traders had been expecting Iraq to make its first oil sales on world markets for six years since the Gulf War in the next few weeks.
But UN Secretary General Dr Boutros Boutros Ghali on Sunday responded to Baghdad's military move into a UN safe haven in Iraqi Kurdistan by delaying the deployment of UN personnel to supervise aid distribution under the oil exchange plan.
Turkey, which provides a pipeline link for Iraqi oil exports, said it expected to see the first Iraqi oil sales delayed "for some time". They had been expected this month.
"The question may be not when will Iraqi oil sales start but whether they will start," said energy analyst Mr Geoff Pyne at Swiss finance house UBS.
"This is a real kick for the markets," said Mr Oystein Berentsen, international crude trading manager for Norway's Stat oil.
"With demand so strong and oil stocks so low, the market was looking as if it could quite easily have absorbed some Iraqi exports." The UN oil for food deal would allow Iraq to sell 2 billion worth of oil over six months to purchase food and other goods.
