Sun, Nov 04, 2007 - Page 10 News List

Possible UN sanctions against Iran drive up oil prices

AP , NEW YORK

Striking French fishermen set a boat on fire on Friday in Pont L'Abb, Brittany, as they stage a demonstration to claim subsidies following recent increases in oil prices.

PHOTO: AFP

The prospect of a stronger US economy and word of possible new UN sanctions against Iran sent crude oil futures back above US$96 a barrel on Friday.

The US Labor Department reported that employers boosted payrolls by 166,000 jobs last month, the biggest increase in months and double what economists had forecast. Meanwhile, last month's unemployment rate held steady at 4.7 percent. Separately, the US Commerce Department said factory orders rose 0.2 percent in September, better than the 0.4 percent decline analysts were expecting.

"It suggests that concerns about the economy ... are overblown a little bit," said Michael Lynch, president of Strategic Energy and Economic Research Inc, in Winchester, Massachusetts.

Oil futures added to their gains late on Friday when the British Foreign Office said the UN Security Council had agreed to draft a new sanctions resolution that could be passed this month if Iranian cooperation with the International Atomic Energy Agency does not improve. Investors worry that any conflict between the West and Iran would disrupt oil supplies from the Middle East.

Light, sweet crude for December delivery rose US$2.44 to settle at a record US$95.93 a barrel on the New York Mercantile Exchange after rising as high as US$96.05 earlier, short of a trading record of US$96.24 set on Thursday. On Thursday, oil prices retreated from that early record to close down more than US$1, in part because of dismal reports on consumer spending and industrial activity that also factored into the Dow Industrial's 362-point decline.

In London, December Brent crude rose US$2.36 to settle at a record US$92.08 a barrel on the ICE Futures exchange.

Crude prices are within the range of inflation-adjusted highs set in early 1980. Depending on the how the adjustment is calculated, US$38 a barrel then would be worth US$96 to US$103 or more today.

Refinery problems contributed to Friday's gains. Operations at a 172,000 barrel-per-day Petroplus Holdings AG refinery in England are expected to be limited for a month due to a fire earlier this week. And Chevron Corp said on Friday its 330,000 barrel-per-day refinery in Pascagoula, Mississippi, will run at reduced rates until early next year owing to a fire in August.

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