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. Last Updated: 07/27/2016

Oil Prices Climb to 6-Month Highs

LONDON -- Oil prices steadied at six-month highs Tuesday as some Muslim exporters reacted coolly to Iraq's threat to cut off supplies to the West to force Israel out of Palestinian territories.

International benchmark Brent crude oil, opening for the first time after a four-day Easter holiday, caught up with a spike in U.S. prices the day before and hit a six-month high of $26.78 per barrel, up 86 cents from Thursday's close. U.S. light crude futures stood 27 cents higher at $27.15, having touched a six-month high at $27.40 per barrel Monday.

Delegates attending a Organization of the Islamic Conference meeting in Malaysia gave no support to Iraq's proposed use of an oil embargo as a weapon against supporters of Israel.

"This is impossible. How can we support our Palestinian brothers if we do not have revenues?" a Kuwaiti delegate said.

"We have to be realistic when talking about the oil weapon. This is a double-edged sword that will do more harm to us than the United States both in the short and long term," he added.

Although neither Israel nor the Palestinians export oil, traders fear unrest could spread in the Middle East, which holds some two-thirds of the world's petroleum reserves.

Iraqi Foreign Minister Naji Sabri said Tuesday at the OIC that it would need concerted action to be an effective weapon.

"It's up to all the Arab oil-producing countries," Sabri told reporters. "But in general terms, the Arab world and Arab countries have the right to coordinate their policies and stand by their brothers, the Palestinians."

Iranian Foreign Minister Kamal Kharrazi said the oil weapon could be an effective tool if it had the full backing of Arab producers, but pro-Israel Washington should first convince the Sharon administration to withdraw.

"The first thing is to put pressure on the United States," he said.

Iran and Kuwait are members of the Organization of the Petroleum Exporting Countries, which groups most major Arab oil-producing nations and supplies more than 20 million barrels per day of crude to the 76 million bpd global market.

Arab nations have not used the oil weapon since the embargo in the 1970s that quadrupled oil prices and severely hit Western nations.

Oil has risen almost 50 percent since a mid-January dip below $18 a barrel and some economists fear high energy prices could derail the fragile U.S. economic recovery.

A sustained rise in energy costs would cut into corporate profits and hit consumer spending through higher pump prices.

Any oil embargo, however, also would need the backing of other big Arab exporters, such as Saudi Arabia, which are competing with rising production from non-OPEC members.

Saudi Arabia and front-line states Egypt, Jordan and Syria did not send their foreign ministers to Kuala Lumpur.

Analysts said that in the three decades since the last embargo, Arab oil-producing economies have become increasingly reliant on export revenues and will be loath to turn down the taps and erode their flow of petrodollars.

Indonesia, the world's biggest Muslim nation and Asia's only OPEC member, said it would be "quite impossible" to obtain consensus in the cartel to use the oil weapon.