Terror and the oil market
From Tom Foreman
CNN
WASHINGTON (CNN) -- The attack in Saudi Arabia on an oil workers' compound in Khobar last weekend, sent a shock wave through world oil markets. When U.S. traders hit the floor after the holiday weekend, the impact was immediate: Oil prices jumped almost two and a half dollars per barrel -- a new high.
Harvard University professor of international relations Joseph Nye calls it the "risk factor" kicking in.
"Indeed, some people feel that about a quarter of the price of a barrel of oil is determined not by supply and demand, but by fears for the future," he explains.
Fear might be the driving force behind the price jump.
Still, in a statement, purportedly from al Qaeda, the group claims it will continue to hit "American companies ... that are specialized in oil and steal the wealth of Muslims."
Operations in Saudi Arabia are prime targets because the Saudis control a quarter of the world's oil reserves. U.S. Secretary of State Colin Powell is encouraging Saudi efforts to fight terrorism.
"They know, this type of activity can not be tolerable ... and they have the resources to go after them, as a civilized nation should," said Powell.
At the Chicago trading firm of Alaron, analyst Phil Flynn thinks it is possible the consequences of attacking the oil trade could be worse for the terrorists than it is for the world.
"I think al Qaeda has made a mistake, a tactical mistake by attacking the Saudi oil industry. Because, in effect, an attack on Saudi Arabia is an attack on the entire OPEC cartel."
If OPEC sees it that way, al Qaeda could find the largest and wealthiest Islamic nations joining much more actively in the battle to defeat the terrorists.
