Oil jumps 3 percent on U.S.-China tensions, OPEC

Mon Mar 9, 2009 3:38pm EDT
By Matthew Robinson

http://www.reuters.com/article/hotStocksNews/idUSTRE5210GO20090309

NEW YORK (Reuters) - Oil jumped more than 3 percent to $47 a barrel on Monday as a naval incident between the United States and China, the world's top oil consumers, boosted geopolitical tensions and as dealers pondered the possibility of deeper production cuts by OPEC.

The U.S. State Department said five Chinese ships, including a naval vessel, harassed an unarmed U.S. Navy ocean surveillance ship in international waters in the South China Sea on Sunday.

"Crude prices are up, I think, in a knee-jerk reaction to the news of Chinese vessels harassing a U.S. Navy ship in the South China Sea," said Phil Flynn, analyst at Alaron Trading in Chicago.

U.S. crude settled up $1.55 at $47.07 a barrel, while London Brent crude fell 72 cents to settle at $44.13 a barrel.