LONDON: The price of oil set a record high above $146 a barrel here on Thursday owing to falling reserves of US crude, simmering tensions over Iran and a weak dollar, traders said.
In reaction, Saudi Arabian Oil Minister Ali Al-Nuaimi said his country, the world’s leading exporter of crude, was “concerned about soaring prices.
Brent North Sea oil for August delivery surged to a life-time peak of $146.69 a barrel in morning trade after breaching $146 for the first time earlier on Thursday.
New York’s main oil contract, light sweet crude for August delivery, leapt to an all-time pinnacle of $145.85 on Thursday.
“There is actually a chance we could see $150 today [Thursday], said the latest Schork Report on energy markets.
Brent oil later stood at $146.34, up $2.08 from Wednesday’s close. New York crude was up $1.98 at $145.55.
Oil prices, which have doubled in value over the past year, were partly driven by news that American crude stockpiles fell by 2.0 million barrels to stand at 299.8 million barrels in the week to June 27.
The US government s Energy Information Administration had also revealed Wednesday that crude inventories were 15.3 percent lower than at the same stage one year ago.
It was the first time inventory fell below the psychologically critical 300-million-barrel threshold since January, said PetroMatrix analyst Olivier Jakob.
The latest record-breaking price surge also came after Iranian Oil Minister Gholam Hossein Nozari said that Iran would react fiercely to any military attack against the oil exporter.
The OPEC oil exporting group said on Thursday that it would be difficult to replace the crude output of Iran should the country face attack.
If something happened in Iran, it is difficult to replace [Iran s output of] 4.1 or 4.2 million barrels a day, OPEC secretary general Abdallah El-Badri told the daily newsletter of the World Petroleum Congress in Madrid.
There has been a surge in speculation recently that Israel might be planning a military strike against Iran s nuclear sites.
Iran has been locked in a five-year standoff with the West over its nuclear program. Iran claims it is for generating electricity while Western powers fear the development of nuclear weapons.
On Thursday, the oil market also found key support from the struggling US currency, which makes dollar-priced commodities cheaper for foreign buyers and tends to encourage demand, analysts said.
Dealers said the US currency could slide further against the euro because the European Central Bank, led by president Jean-Claude Trichet, was widely expected to increase Eurozone interest rates on Thursday.
The weaker dollar theme is likely to persist and influence most markets today [Thursday], said Sucden analyst Andrey Kryuchenkov.
In the longer run, crude prices are still well supported by geopolitical concerns, persistent supply disruptions and fears over tight supplies. – AFP
