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. Last Updated: 07/27/2016

Oil Prices Soar to New High Of $27 a Barrel in New York

LONDON -- Oil prices rocketed to a nine-year high after Iraq suspended oil exports under its humanitarian exchange program with the United Nations.

Crude oil futures on the New York Mercantile Exchange pushed up to $27 a barrel Monday as Iraq halted oil shipments, the first time it has been at that level since the middle of the Iraq crisis in January 1991.

London January Brent futures opened at $25.90, the highest oil price since January 1991 when allied forces were preparing to eject Iraqi troops from Kuwait. By late afternoon Brent stood at $25.67 a barrel, 63 cents up from Friday's close.

The continued surge in prices is further good news for Russia's oil majors which are already enjoying their best year after starting the year receiving only about $10 a barrel for oil sold abroad.

Prices soared as Iraq's Oil Minister Amir Mohammed Rasheed confirmed Monday that Iraq would stop loading oil tankers under the current six-month phase of its oil-for-food exchange.

Baghdad on Saturday protested the UN's proposal to extend by two weeks the sixth phase of the program and accused the United States of trying to push other Security Council members into accepting a draft resolution on weapons inspections.

Oil analysts said the loss of Iraq's 2.2 million barrels per day of exports from the 75 million bpd world market would exacerbate a looming supply shortage this winter.

"Against a background where inventories are already declining rapidly, and with the first bout of winter weather, the oil market is becoming uncomfortably tight," said David Knapp, head of the markets division at the International Energy Agency in Paris.

"Clearly the West doesn't want oil prices to go any higher and Saddam knows that," said Nauman Barakat of ABN Amro in New York of Iraqi leader Saddam Hussein.

"His timing is impeccable."