AMPLE SUPPLIES LIMIT U.S. STRIKE'S OIL PRICE IMPACT
  Ample supplies of OPEC crude weighing on
  world markets helped limit and then reverse oil price gains
  that followed the U.S. Strike on an Iranian oil platform in the
  Gulf earlier on Monday, analysts said.
      December loading rose to 19.65 dlrs, up 45 cents before
  falling to around 19.05/15 later, unchanged from last Friday.
      "Fundamentals are awful," said Philip Lambert, analyst with
  stockbrokers Kleinwort Grieveson, adding that total OPEC
  production in the first week of October could be above 18.5 mln
  bpd, little changed from September levels.
      Peter Nicol, analyst at Chase Manhattan Bank, said OPEC
  production could be about 18.5-19.0 mln in October. Reuter and
  International Energy Agency (IEA) estimates put OPEC September
  production at 18.5 mln bpd.
      The U.S. Attack was in retaliation of last Friday's hit of
  a Kuwaiti oil products tanker flying the U.S. Flag, the Sea
  Isle City. It was struck by a missile, believed to be Iranian,
  in Kuwaiti waters, and was the first hit on a U.S. Flag
  commercial vessel in the seven year Iran/Iraq war.
      The U.S. Owned Liberian flag tanker Sungari was hit in the
  area on Thursday, also believed struck by an Iranian missile.
      Refiners were not significant purchasers of physical oil on
  Monday as a result increased Gulf tension following the U.S.
  Attack, analysts said.
      They said a closure of the Strait of Hormuz, through which
  around eight mln bpd passes, isnlikely because it is not in
  the interests of the U.S. Or Iran, they said.
      Any threat to oil supplies would stem from an increase in
  the number of tanker attacks as part of a widening of Gulf
  hostilities, analysts said.
      But they saw the U.S. Strike as a limited reply to Iranian
  missile attacks, with some describing it as responsible.
      Geoffrey Pyne, analyst at stockbrokers Phillips and Drew,
  said he was impressed by the sensible U.S. Response.
      "The U.S. Has thought carefully about what would correspond
  to Iranian agression. They have proved to the Iranians that any
  further action will be met with a like-for-like response.
  Today's action by the U.S. Was not escalatory," Pyne said.
      Kleinwort Grieveson's Lambert said the U.S. Strike was "a
  responsible retaliation," with the U.S. Apparently indicating to
  Iran that it could increase the severity of its attacksf Iran
  chose to raise the level of conflict.
      Chase Manhattan's Nicol took a different view, however.
      He said he was unable to see what the U.S. Had achieved as
  Arab states such as Kuwait and Saudi Arabia, whose interests
  the U.S. Is supposedly defending, will feel less secure as a
  result of the U.S. Attack and fear some sort of Iranian
  retaliation.
      The initial upward market move this morning reflected a
  strong speculative reaction to rumours of a U.S. Attack which
  was thought at one stage to have been against Iranian missile
  launchers on the Faw Peninsula, close to Kuwait, analysts said.
      The later downtrend followed confirmation of a U.S. Navy
  attack on an Iranian oil platform by the U.S. Defence Secretary
  Caspar Weinburger.
      Market operators were able to evaluate the situation in the
  Gulf on the basis of confirmed fact, and finding it less
  serious than first thought, took profits, taking prices lower,
  analysts and traders said.