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Georgia crisis hits oil price -

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ELEANOR HALL: Well while there wasn't a spike in the oil price when the conflict in the former
Soviet republic of Georgia began, world oil prices are on the rise again now.

The world's second largest pipeline, which carries oil from Central Asia to Western Europe, runs
through Georgia and oil analysts are voicing concerns about its security.

The Georgians say Russian jets targeted part of the network unsuccessfully on Saturday. But while
the oil price has resumed its rise, it's still cheaper than last week.

As Brendan Trembath reports.

BRENDAN TREMBATH: It's scenes like this in the former Soviet Union, a Russian plane attacking a
town in central Georgia that have helped push up the price of oil.

David Moore is a commodity strategist at the Commonwealth Bank of Australia.

DAVID MOORE: Oil prices have moved somewhat higher in trading this morning, the price oil currently
was West Texas Intermediate, just over $116 a barrel.

BRENDAN TREMBATH: Oil tends to rise when people worry its supply could be disrupted or blocked
altogether. The current conflict in the former Soviet Union might threaten the flow of oil from
vast fields in Central Asia.

The oil is piped to the West through a pipeline owned by companies such as BP. More than one per
cent of the world's oil is piped this way. The pipeline is actually a series of pipes and it
stretches through Azerbaijan and Georgia to a terminal on the Mediterranean coast of Turkey.

David Moore again.

DAVID MOORE: The pipelines through Georgia are important in carrying oil, one of the pipelines is
actually damaged in a completely separate incident last week that was affecting the supply of oil.

BRENDAN TREMBATH: Now it's been reported that part of the pipe network has been targeted by Russian
jets. Britain's Telegraph newspaper cites local reports in Georgia that 51 missile strikes left
craters on either side of a pressure vent. This is at odds with what a BP spokesman says.

He tells the Telegraph that thorough checks disclosed no bombing in the vicinity of the pipeline.
The reported attack raises fears that Russia may be moving to increase its grip on the supply of
oil in this part of the world.

The pipeline bypasses Russia. If the pipes were knocked out of action for some time Russia would
have more control over supplies of oil to Western Europe. Russia has previously denied making moves
to squeeze Europe's access to oil.

While the people who buy and sell oil keep an eye on the conflict in Georgia, there are bigger
concerns to face such as slowing world demand. In slowing economies companies and consumers
generally reduce their oil consumption.

David Moore from the Commonwealth Bank says price gains in the widely-traded types of oil like West
Texas Intermediate crude have been limited.

DAVID MOORE: It's worth noting though that it's still well below the levels we saw for most of last
week. Even last Thursday the WTI price was around $120 a barrel, so at the moment, concerns of
slower international economic growth and also the firmer US dollar have both acted to keep oil
prices at a lower level than what was previously existing.

BRENDAN TREMBATH: The former chairman of the US Federal Reserve Alan Greenspan attributes oil's
recent drop to speculators unwinding bets. According to the Financial Times newspaper he says there
is not much of a chance of a renewed spike in oil.

Most motorists would hope he's right.

ELEANOR HALL: Brendan Trembath reporting.