Crude oil rose to a record above US$85 a barrel as tensions on the Turkey-Iraq border increased concern that supplies may be threatened as global inventories decline.
Turkish lawmakers will vote this week on allowing military attacks within a year against Kurdish rebel bases in the north of Iraq, which has the world's third-largest oil reserves. Global fuel inventories fell below a five-year average last month, a period when they typically rise, the International Energy Agency said on Oct. 11.
"The Turkish-Iraqi dispute is adding to the bullish sentiment," said Edo Gerbrands, a trader with Fortis Bank in Brussels. "Today, we start from scratch to get it higher."
Crude oil for delivery next month climbed as much as US$1.50, or 1.8 percent, to US$85.19 in electronic trading on the New York Mercantile Exchange. The contract traded at US$84.76 at 11:43am London time.
Brent crude oil for settlement next month rose as much as US$1.38, or 1.7 percent, to a record US$81.93 a barrel on the London-based ICE Futures Europe exchange. It traded at US$81.73 a barrel at 11:43am.
Prices rallied last week after 15 Turkish soldiers were killed by Kurdistan Workers' Party rebels. Crude also rose as the IEA said declining product inventories are sustaining high prices and after a US Energy Department report showed the nation's crude stockpiles unexpectedly fell the week before.
Citigroup Inc raised its forecast of the price of Brent and West Texas Intermediate oil by US$10 a barrel to US$70 a barrel next year and to US$65 in 2009.
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