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CNN Live At Daybreak

Fears of Wider War in Middle East One Reason For Higher Gas Prices

Aired April 10, 2002 - 06:36   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: One reason we are seeing higher prices for gasoline at the pump: fears of a wider war in the Middle East. Analysts say another reason: uncertainty caused by a cutoff of Iraqi oil.

CNN's Jane Arraf has a look at that story.

(BEGIN VIDEOTAPE)

JANE ARRAF, CNN CORRESPONDENT (voice-over): It was a warning to Washington. Even under sanctions and the threat of a U.S. attack, Iraq can still make trouble if it wants to.

Iraq's oil minister said keeping roughly two million barrels of oil a day off world markets was aimed at the United States, its enemy and ironically biggest oil customer, for its support for Israel.

GEN. AMER RASHEED, IRAQI OIL MINISTER (through translator): We took this decision to harm the American economy. It's directed at the American administration in a way to make it feel it is paying the cost of its collaboration with the Zionist entity.

ARRAF: No other OPEC country has so far joined Iraq's call for an oil boycott. Key producer, Saudi Arabia, actually said it would pump more oil if needed to help the U.S. But the Iraqi president has already won points on the Arab street, diplomats in the region say, by being seen as one of the only Arab leaders to stand up to Washington.

UNIDENTIFIED FEMALE: Iraqi people all say that Iraq and Palestine was subject (ph). They are all the same enemy, American enemy and Israel enemy.

ARRAF: But Iraq will pay for those political gains, almost $1.5 billion in lost oil revenue. That's money Iraq would normally use to buy humanitarian supplies under the U.N. Oil for Food Program.

Still, U.N. officials say there is enough food and medicine in the country for several months.

TUN MYAT, UNITED NATIONS: But in the immediate term, then of course, you will feel the impact of it. The program is already running at a funding deficit. We now have contracts, applications that have already been approved but are waiting additional funding to come through.

ARRAF: While there are billions of dollars of goods still in the pipeline...

(on camera): ... even before cutting off the oil, Iraq wasn't pumping enough to pay for contracts it had already signed for food, medicine and other goods. The Iraqi leader seems to have calculated that the political benefit outweighs the cost to his people.

Jane Arraf, CNN, Baghdad.

(END VIDEOTAPE)

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