Oil prices hovered above US$78 per barrel yesterday, near record highs, as intensifying violence in the Middle East raised concerns of a possible disruption of oil supply.
"We are certainly in uncharted territory," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
"I wouldn't be surprised if US$80 is attained soon with this slew of geopolitical events in a tight market," he said.
PHOTO: AFP
Oil prices are being pushed higher by rising global demand and worries that the world's limited supply cushion would not be adequate to offset a lengthy disruption to output in major producing countries, such as Iran or Nigeria. There are also concerns about the risks hurricanes pose to US production.
"We haven't even taken into account a potential hurricane in the United States, so getting to US$80 and beyond this summer seems quite inevitable," Shum said.
"But if these Middle East events somehow get resolved, prices could also drop sharply," he said.
While Israel and Lebanon are not involved in the Middle East oil market, the fear is that the conflict could spill into other corner of the region, which produces nearly a third the world's oil and contains almost two-thirds of its untapped reserves.
Light sweet crude for delivery next month was up US$1.35 to US$78.05 a barrel in midafternoon Asian trading on the New York Mercantile Exchange. The price closed on Thursday at a new high of US$76.70 a barrel, then continued climbing in after-hours electronic trading, when volumes are significantly lower, to US$78.40.
The Brent contract for next month at London's ICE Futures exchange, which expired at the close of trading yesterday, jumped US$1.16 to US$77.85 per barrel.
The rally came as fighting between Israel and Lebanon intensified, explosions hit Nigerian oil installations and a diplomatic standoff dragged on between the West and Iran over its nuclear program.
The surge in oil prices rattled global financial markets, with Japan's Nikkei 225 index falling 1.7 percent yesterday, while the Dow Jones industrial average dropped 1.5 percent on Thursday.
The previous Nymex settlement record of US$75.19 was set on July 5. The previous intraday record of US$75.78 was posted two days later.
In other trading, gasoline futures climbed US$0.0352 to US$2.3365 a gallon, heating oil futures rose more than US$0.04 to US$2.1238 a gallon and natural gas futures advanced US$0.099 to US$6.228 per 1,000 cubic feet.
Meanwhile, Iran has threatened on more than one occasion to use oil as a weapon if the UN uses economic sanctions or some other punishment in its dispute with Tehran over its nuclear program.
While OPEC's No. 2 supplier has not raised the issue of withholding oil from the market in a sign of solidarity with Hezbollah, the possibility is no doubt influencing oil traders' actions.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
CHINA POLICY: At the seventh US-EU Dialogue on China, the two sides issued strong support for Taiwan and condemned China’s actions in the South China Sea The US and EU issued a joint statement on Wednesday supporting Taiwan’s international participation, notably omitting the “one China” policy in a departure from previous similar statements, following high-level talks on China and the Indo-Pacific region. The statement also urged China to show restraint in the Taiwan Strait. US Deputy Secretary of State Kurt Campbell and European External Action Service Secretary-General Stefano Sannino cochaired the seventh US-EU Dialogue on China and the sixth US-EU Indo-Pacific Consultations from Monday to Tuesday. Since the Indo-Pacific consultations were launched in 2021, references to the “one China” policy have appeared in every statement apart from the
More than 500 people on Saturday marched in New York in support of Taiwan’s entry to the UN, significantly more people than previous years. The march, coinciding with the ongoing 79th session of the UN General Assembly, comes close on the heels of growing international discourse regarding the meaning of UN Resolution 2758. Resolution 2758, adopted by the UN General Assembly in 1971, recognizes the People’s Republic of China (PRC) as the “only lawful representative of China.” It resulted in the Republic of China (ROC) losing its seat at the UN to the PRC. Taiwan has since been excluded from