Print

Mail

wiki links

Seizure of UK troops drives crude to year's highest level

An unidentified government official collects fuel as he tries to locate the point where a pipeline was vandalized in Lagos, Nigeria, on Friday. Gunmen kidnapped three foreigners on Friday in separate attacks in southern Nigeria amid an upsurge of violence shaking the region where Africa's biggest oil producer pumps its crude, police said. PHOTO: AP

World oil prices were driven to the highest levels of the year on Friday by news that 15 servicemen from a British warship had been seized in the Gulf by Iran.

Crude futures gained further support from weak levels of motor fuel stocks in the US ahead of the peak-demand driving season, starting in May when many Americans take to the roads for holidays, traders said.

New York's main oil futures contract, light sweet crude for delivery in May, leapt on to US$62.65 per barrel at one point on Friday, a high last seen on Dec. 22. The contract subsequently closed up US$0.59 at US$62.28.

In London, the price of Brent North Sea crude for May delivery surged to US$63.68 per barrel at one point, its highest level since Dec. 8.

The contract later settled up US$0.67 at US$63.18.

Since last Monday, prices have jumped by almost US$6 in New York and US$3 in London.

Prices surged after news that 15 British sailors and marines had been seized by Iranian naval vessels in the Gulf on Friday, Britain's Ministry of Defense said.

"It's premature to judge the seriousness of this incident, but it is potentially explosive."

John Kilduff, Fimat analyst

Iran claimed that the sailors had illegally entered its territorial waters.

"This sort of incident and subsequent mishandling, is just the sort of thing that fuels concerns about a global conflagration over oil," Fimat analyst John Kilduff said.

"It's premature to judge the seriousness of this incident, but it is potentially explosive," he said.

The Ministry of Defense, which said the sailors had been engaged in "routine" anti-smuggling operations in Iraqi waters, demanded their immediate release and sought urgent clarification from Tehran.

Iran is the world's fourth-biggest producer of oil and is the second-biggest producer in the OPEC after Saudi Arabia.

The servicemen's seizure came as the UN Security Council prepared to vote on new sanctions aimed at forcing Tehran to curb its nuclear program.

Industry experts fear Iran might disrupt its crucial oil exports if the international community punishes the Islamic republic with economic sanctions.

Crude futures had slipped earlier on Friday as traders took profits from big gains on Thursday amid concerns over weak US gasoline or petrol reserves, analysts said.

The US Department of Energy revealed that US gasoline reserves had sunk by 3.4 million barrels to 210.5 million in the week to March 16. The reading was heavier than market expectations for a dip of two million.

Gasoline is moving into focus ahead of the peak-demand US driving season.
This story has been viewed 1116 times.