NEW YORK, April 9 (IslamOnline & News Agencies) – Iraq's decision to halt its petroleum exports sent oil prices soaring more than they were Monday, April 8, already because of the Middle East crisis and social unrest in Venezuela, news agencies reported.

In London, benchmark Brent North Sea crude for May delivery spiked as high as 27.43 dollars a barrel on Monday. Prices later stabilized around 27 dollars a barrel, up from 25.99 on Friday evening. Prices were 16 dollars a barrel in December, reported Agence France-Presse (AFP).

In an interview with U.S. daily newspaper, The Wall Street Journal, U.S. President George W. Bush said the rising price of crude oil could harm the fragile U.S. economic recovery and that he would consider some options if Iraq's oil embargo makes matters worse.

On Monday, Iraqi President Saddam Hussein announced that the halt will last "30 days, after which we will review [the decision], or until the armies of the Zionist entity have unconditionally withdrawn from the Palestinian territories they have occupied and [until they] respect the will of the Palestinian people and the Arab nation.”

Saddam urged other Arab and Muslim oil producers to follow suit and suspend crude exports. "Our Arab and Muslim brethren and all believers will hopefully encourage our move ... by taking similar measures in the case of those who have oil," he said in a televised address.

"This decision is essentially aimed against the Zionist entity and the aggressive U.S. policy, not against anyone else," Saddam said, accusing the United States of being Israel's accomplice in the blitz on West Bank towns.

The oil ministry said in a statement that oil exports stopped at 1000 GMT from Mina al-Bakr terminal on the Gulf and the Turkish Mediterranean port of Ceyhan, the two ports through which Iraq's oil flows.

"This measure (suspension) means that (the absence of) two million barrels of Iraqi oil will have a major impact on the oil market and directly hurt the U.S. economy," Oil Minister Amer Mohammad Rasheed told Iraq's satellite channel.

The United States purchases "1.25 million barrels of Iraqi oil (per day), amounting to 12 to 15 percent of U.S. oil imports," Rasheed said.

Iraq's central bank governor claimed the move would not the economy. "Iraq's decision will have no effect on its financial commitments ... economic activities or the exchange rate" of the national currency, Issam Rasheed Howaish was quoted as saying by the official Iraqi News Agency (INA) news agency.

Hundreds of Iraqis took to the streets of Baghdad later Monday to express support for Saddam's decision. "Arab oil belongs to the Arabs," read one of the banners carried by the marchers.

The potential for an oil shock is a reason "why we've got to be very cautious about making bold predictions about the economy. We're an energy-dependent nation," Bush told the Journal.

"Bad energy policy, or the failure to have energy policy, or the fact that we're dependent upon unstable countries is a reason why I do not believe that we're out of the economic woods yet," Bush told the leading U.S. economic daily.

On Iraq's decision on Monday to cut off all oil exports for 30 days to protest the Israeli military offensive in the West Bank, Bush made it clear he was willing to "look at all options," if the Iraqi threat creates a problem.

Bush specifically refused to rule out tapping the nation's strategic petroleum reserve or a reduction in gasoline taxes if necessary, the daily said. The president, however, played down the threat to the world oil markets.

Besides Iran and Libya, who are prepared to back Iraq's oil embargo, some oil producing countries have publicly rejected the move.

In comments published in the London-based Al Hayat newspaper, Saudi Oil minister Ali al-Nuwaimi said that Saudi Arabia rejects the use of oil as a weapon to apply political pressure on the West.

OPEC Secretary General Ali Rodriguez said Monday he was consulting members of the oil cartel following Iraq's announcement. “I am engaged in intensive consultations about Iraq's decision to suspend exports with the (OPEC) ministers concerned," Rodriguez, who was attending an oil and gas conference in Doha, told AFP.

Meanwhile, Qatar's Oil Minister Abdullah bin Hamad al-Attiyah said Doha opposed an oil embargo on countries which back Israel, warning it could backfire. "If the Arabs use oil as a weapon ... the results will be contrary to those expected," he told the official QNA news agency.

"Friendly and developing countries will be penalized and seriously affected because prices will soar for a while," he added, noting that some Western countries, including the United States, have large oil stocks.

Iran's supreme leader Ayatollah Ali Khamenei had called on Islamic oil-producing countries Friday to suspend their exports to Western countries and those that have relations with Israel "for a symbolic period of one month."

Libya voiced support for the call. But Iranian oil exports were continuing after Baghdad's announcement, an Iranian oil expert told AFP.

David Costello, an oil economist at the U.S. Department of Energy said that Iraq's 30-day halt to oil exports could send prices surging five dollars a barrel if no other nation fills the gap.

The scenario supposed that Iraq cut back the entire 1.4-1.5 million barrels of oil a day that it currently exports to the West and that no other oil-producing nations filled the gap, he said.

Speaking to IslamOnline, Dr. Hussein Abdullah, the former OPEC consultant said that the Iraqi decision should have been preceded by extensive studies conducted by experts and specialists in the oil market field in order to reach a unified mechanism for all oil producing Arab countries to abide by.

The next step, he said would be to invite other Islamic countries to join, in order to form a strong pressure on the oil consuming countries.

Dr. Abdullah said that the Iraqi initiative, despite its importance, would be defeated in case other Gulf countries decide to double its output to cover the vacuum which resulted, and the Iraqi people would only suffer more for the shortage of foodstuff during the period of the embargo.

He added that there is still a chance for oil producing Arab and Islamic countries to hold a meeting for oil experts to study the Iraqi initiative an how it can be utilized through a joint decision.

The decision will not aim to completely stop exporting oil but to reduce the production ceiling so that the price increases to 30 dollars per barrel and for all oil producing countries to commit the price difference to support the intifada and the Palestinian authority. This, he said, would be the practical response for the U.S. and Western bias towards Israel in this conflict.

He added that many countries have started to take their precautions in case the oil producing countries decide to use the oil weapon again as they did in 1973. These precautions include storing large quantities of oil enough for 200 days and directing some factories to use alternatives forms of energy as well as placing a hand over oil producing countries such as the case of the United States and its fleets in the Persian Gulf.

Speaking last week to IslamOnline, Maghawri Shalaby, an Egyptian economic analyst, also said that the oil weapon must be used as a unified Arab and Islamic position.

According to a report issued by the Brookings Institution study on Monday, April 8, despite the rising prominence of Russia and the Caspian Sea, the Middle East holds from two-thirds to three-quarters of all known reserves, said the report, Energy and the Environment.

Brookings' economists estimated world crude prices could spike to 75 dollars a barrel if another Middle East crisis were to remove up to seven million barrels a day from the market.