Iraq cuts oil in protest

BAGHDAD, Iraq -- President Saddam Hussein announced Monday Iraq is cutting its oil exports for a month in protest at Israel's military offensive in the West Bank.

Hussein said in his speech: "The oppressive Zionist and American enemy has belittled the capabilities of the (Arab) nation."

The Iraqi leader said the Israeli move into Palestinian towns "took place according to a joint coordination between the Zionist entity and the American administration, whose aim is ... to break the Arab and Palestinians will and force them to surrender with humiliation to the Zionist-American alliance."

The halt in oil would include all exports through Turkey and the Persian Gulf port of Basra, including that for the United Nations oil-for-food program, which limits Iraq's oil exports in exchange for food and medical supplies.

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Most of Iraq's oil is indirectly exported to the United States and Europe.

In a nationally televised speech, Hussein said Iraq's top leaders had met earlier Monday and decided "in the name of the people of Iraq ... to stop exporting oil totally ... through the pipelines flowing to the Turkish ports and the south for 30 days" unless Israel withdrew earlier.

He said that if Israel had not withdrawn within that time, Iraq would consider what action to take.

Iraq began making calls last week on Arabs to cut oil supplies as a way of pressuring the United States to force Israel to end its military incursions into Palestinian territory.

World financial markets have been concerned any increase in the cost of oil could derail a fragile global economic recovery, CNN's Todd Benjamin reported.

An increase of one percent at the gas pumps can slash consumer spending by $1 billion in the U.S. alone, analysts have predicted.

The Organization of the Petroleum Exporting Countries (OPEC), which accounts for 40 percent of the world's oil output and sits on more than three-quarters of the world's proven oil reserves, quickly distanced itself from its member nation Iraq.

"OPEC does not support Iraq's oil embargo, as it goes against the organization's objective, which is to bring about stability and harmony to the oil market," an OPEC spokesman told CNN. "OPEC would like to distance itself from the political decisions of member countries."

But Hussein's announcement did contribute, in part, to an increase in oil prices today. Shortly before 1:00 p.m. ET on Monday, light sweet crude oil futures were up 65 cents in New York, trading to $26.86 a barrel. Brent oil futures were up 97 cents in London, trading at $26.48 a barrel.

Though the U.S. government said prices could spike as high as $30 a barrel if the Iraqi oil is not replaced in the market, it doubts other oil producers will allow that to happen.