Oil prices spiked to a new record above US$147 a barrel yesterday, as rising hostilities between the West and Iran and the potential for attacks on Nigerian oil facilities gave investors reason to rush back into the energy markets.
Light, sweet crude for next month delivery jumped US$4.69 to US$146.34 a barrel in early trading on the Nymex, after reaching an all-time high of US$147.27. August Brent crude rose to a new trading record of US$147.50 before easing back to trade US$4.82 higher at US$146.85 a barrel on the ICE Futures exchange in London.
Iran has been testing missiles this week, including a new missile capable of reaching Israel. On Thursday, US Secretary of State Condoleezza Rice warned Tehran that the US will defend its allies, and Iran responded with another missile launch.
Crude had fallen by nearly US$10 a barrel over two days at the start of the week, but rebounded by more than US$5 a barrel on Thursday as anxiety heightened about Middle East and Nigerian supplies being disrupted.
Neither the US nor Israel has ruled out a military strike on Iran. Traders fear Iran could block the Strait of Hormuz, through which about 40 percent of the world’s tanker traffic passes.
“There’s always a fear premium in pricing. The tensions in Iran and the threat of supply disruption will help support oil prices,” said Jeff Brown, managing director of FACTS Global Energy in Singapore.
OPEC warned on Thursday that it cannot replace the shortfall if Iran is attacked and takes its crude supplies off the market.
Also on Thursday, Nigeria’s main militant group said it would resume attacks because of Britain’s recent vow to back the government in the conflict there.
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