World oil prices hit a new record high above US$146 per barrel yesterday, as the market fretted over Middle East tensions, falling US crude reserves and the weak dollar, traders said.
Brent North Sea oil for August delivery surged to a life-time peak of US$146.34, up US$2.08 from the close on Wednesday.
New York’s main oil contract, light sweet crude for August delivery, also touched a record high, surging past the US$145 level for the first time to reach an all-time pinnacle of US$145.53 per barrel yesterday, up US$1.96 from Wednesday.
PHOTO: AFP
The latest record-breaking price surge came after Iranian Oil Minister Gholam Hossein Nozari had said on Wednesday that the key oil producer would react fiercely to any attack against it.
“Iran, if there were any kind of activity of any sort, is not going to be quiet and would react fiercely,” he told reporters on the sidelines of the World Petroleum Congress in Madrid.
He said oil prices, which have been driven to record levels partly because of fears about the loss of Iranian output, would rise radically if Israel or the US launched a military strike.
The secretary general of the OPEC oil exporting group said that it would be difficult to replace the crude output of Iran if the country was attacked, in comments published yesterday.
“If something happened in Iran, it is difficult to replace 4.1 or 4.2 million barrels a day,” Abdallah el-Badri told the daily newsletter of the World Petroleum Congress, referring to Iran’s daily output.
“The price [of crude] of course will go up,” he said.
Asked about fears that Iran would close the straits of Hormuz if attacked, a key shipping route through which 40 percent of Middle Eastern oil passes, he replied: “When you are in a war, you are in a war. You can use anything.”
There has been a surge in speculation recently that Israel might be planning a military strike against Iran’s nuclear sites after it emerged that Israeli fighter planes had carried out practice runs.
Iran has been locked in a five-year standoff with the West over its nuclear program, which it says is for generating electricity, while Western powers fear the development of nuclear weapons.
Crude futures, which have doubled in value over the past year, were also driven by news that US crude stockpiles fell by 2 million barrels in the week to June 27.
The oil market also found solid support from the struggling US currency, which makes dollar-priced commodities cheaper for foreign buyers and tends to encourage demand, analysts said.
The euro rose as high as US$1.5892 in early morning trade yesterday ahead of what is widely expected to be a eurozone interest rate hike from the European Central Bank.
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