Oil prices fell more than US$1 a barrel on Friday from record levels set a day earlier on hopes that tensions surrounding Iran’s nuclear program could ease and cut the chances of US or Israeli military action against OPEC’s second-largest oil producer.
Iran on Friday gave an undisclosed response to an international offer of economic and other incentives if it suspends a central part of its nuclear program.
Iran’s ambassador to Belgium presented the response to EU foreign policy chief Javier Solana in Brussels, Iranian state TV reported.
By evening in Europe, light, sweet crude for August delivery fell US$1.19 to US$144.10 a barrel in electronic trading on the New York Mercantile Exchange.
There was no floor trading on Friday in New York because of the July 4 holiday.
Crude futures reached a record high of US$145.85 in New York on Thursday before settling at a record close of US$145.29 a barrel.
Trading volumes were lower than usual.
In London, Brent crude futures fell US$1.15 to US$144.93 a barrel on the ICE Futures exchange.
Oil prices have risen more than 50 percent so far this year.
Suggestions by Saudi Arabia’s oil minister that his country doesn’t plan to boost production helped bolster prices earlier in the session.
Saudi Arabian Oil Minister Ali Naimi said on Thursday in Madrid that the world’s biggest oil exporter had no immediate plans to boost crude output because there was no need to do so.
Naimi said Saudi Arabia is ready to raise production if the kingdom determines supply-and-demand fundamentals have changed.
But for now, “all our buyers are satisfied and happy,” he said.
Gains by the dollar on Thursday against the euro helped keep oil prices from rising further. The greenback strengthened after the European Central Bank raised its benchmark interest rate an expected quarter point but signaled it didn’t expect additional rate hikes that might further boost the euro.
A falling dollar has helped boost oil prices this year as investors often buy commodities such as oil as a hedge against inflation when the greenback weakens. Also, a struggling dollar makes oil less expensive to investors overseas.
Oil prices are rising amid a drop in stock prices worldwide, with the major stock market indices all down by double digits since the start of the year.
Recent saber-rattling in the Middle East is another reason for this week’s increase. Traders are concerned that a conflict with Iran could disrupt tight global supplies.
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