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. Last Updated: 07/27/2016

Oil Holds at 2-Year Highs With No Shortage Seen

LONDON -- Strong oil prices held ground Monday, awaiting the report from UN weapons inspectors for clues to the likelihood of war in Iraq.

U.S. light crude rose 2 cents to $33.30 a barrel, extending Friday's gains of more than $1 in New York. London Brent added 13 cents to $30.62 a barrel.

U.S. President George W. Bush will make a State of Union address Tuesday and is due to meet key ally Britain's Prime Minister Tony Blair later this week.

"Each of these stages will provide further clarity and we can expect a time table to war to become a little clearer," said Sydney-based independent oil analyst Simon Games-Thomas.

The world's biggest oil exporter, Saudi Arabia, said over the weekend that it and fellow OPEC members were pumping sufficient volumes to prevent shortages on world markets.

Oil prices are near two-year highs on concerns that an attack on Iraq might coincide with the ongoing strike in Venezuela, which has strangled exports from the world's fifth-biggest exporter.

"There is no shortage in the market and there should be no reason for prices where they are today," Saudi Oil Minister Ali al-Naimi told a panel in Davos.

"We checked. We called. I checked with individual customers, refineries and others. I ask them one question: Do you feel you need more oil? And the answer is no," he said.

The Organization of the Petroleum Exporting Countries agreed two weeks ago to raise output by 1.5 million barrels per day to counter the shortfall caused by a nationwide strike in Venezuela.

"What can we do more? I do not agree there is a lack of oil," OPEC Secretary-General Alvaro Silva said at the forum. "The problem of the price is the threat of war."

Venezuelan President Hugo Chavez hinted over the weekend that he may be forced to take up arms if he were defeated by the opposition movement, which is calling for Chavez to step down.

Venezuelan crude output has recovered from lows in December when it was running at a trickle of about 150,000 bpd against more than 3 million bpd before the strike, which started Dec. 2.

Strikers said Sunday that production was about 986,000 bpd, 30 percent of pre-strike levels, while Chavez claimed production had reached 1.32 million bpd.