Saddam Hussein said today that Iraq would cut oil exports for 30 days, or until Israel withdraws from Palestinian territories, making it the first time in 29 years that an Arab nation has used oil as a political weapon.
Hussein said that if Israel had not withdrawn within the 30 days, Iraq would consider what action to take next.
OPEC Secretary-General Ali Rodriguez said he will consult with cartel oil ministers on Tuesday and the group could hold an emergency meeting to decide policy.
The Arab-dominated cartel controls two-thirds of world oil exports and could easily replace lost Iraqi and Venezuelan barrels after cutting five-million barrels of daily production since January last year.
Brent crude oil for May settlement rose as much as $1.44, or 5.5%, to $27.43 a barrel on the International Petroleum Exchange in London, within $1 of a six-month high. Brent has gained 36% this year. U.S. crude futures rose 67 cents to $26.88.
Iraq last week called on Arab nations to cut oil supplies as a way of pressuring the United States to force Israel to end its military incursions into Palestinian territory.
A boycott would be ineffective without Saudi Arabia and Kuwait, who have rejected Iraq's call to use oil as a weapon. Many Gulf States depend on oil revenues for more than two-thirds of government income and cannot afford to stop sales.
In November 2000, Saudi Arabia led the adoption of a pledge by OPEC and other major exporters that oil would not be used as a political weapon.