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French Version

Oil prices hit three-month high of $65

Investors fear rising political tension in iran, nigeria

World oil prices hit the highest levels for over three months on Tuesday, breaching $65 in New York and $64 in London on rising geopolitical tensions in Iran and Nigeria, dealers said. New York's main contract, light sweet crude for delivery in February, jumped $1.46 to $65.38 per barrel in electronic dealing. It had earlier climbed to $65.53 - the highest since October 3, 2005.

In London, the price of Brent North Sea crude for March delivery rose by $0.95 to $64.13 per barrel. The February contract had expired Monday at $62.93 per barrel.

Earlier Tuesday, the March contract reached $64.28, the best level since September 29 last year.

In Tuesday trade "both Brent and New York light crude futures were higher as concern about Iran's restarted nuclear enrichment program and the supply problems from Nigeria" continued, , analysts at the Sucden brokerage said.

Crude futures have gained around 5 percent since the start of 2006.

However, they remain below the record levels of August 2005, when Hurricane Katrina devastated U.S. Gulf Coast energy installations and prices struck $70.85 per barrel in New York and $68.89 in London.

Europe's leading nations were pressing for an emergency meeting of the UN atomic watchdog over Iran's nuclear program, amid signs that Tehran may yet agree to a compromise proposal from Russia.

After talks in London on Monday that also included officials from China, Russia and United States, the EU troika of Britain, France and Germany said it wanted the International Atomic Energy Agency (IAEA) to meet on February 2-3.

Investors fear that economic sanctions against Iran might prompt the oil-rich nation to call a halt to its crude exports. Iran exports some 2.7 million bpd of crude, mainly to Asian and European countries.

"Prices are strong at the moment primarily because of the tensions over Iran and concerns over what might come out from the IAEA inspection," Global Insight analyst Simon Wardell said.

Elsewhere, threats to oil exports from Nigeria, Africa's biggest crude exporter, added to the upward price pressure.

The past week has seen unrest in the southern region where armed gangs have kidnapped four foreign oilmen working for the Anglo-Dutch giant Royal Dutch Shell and sabotaged an oil pipeline, costing the firm some 211,000 barrels of crude daily, or 8.4 percent of Nigeria's exports of 2.6 million barrels.

Traders were also absorbing the International Energy Agency's monthly review of the oil market.

Demand for oil in China and the U.S. will drive a 2.2-percent increase in global oil consumption this year and an anticipated seasonal fall in demand in the second quarter looks uncertain, the IEA said Tuesday.

The agency also said that it had revised down its forecast for growth of demand for oil in 2005 to 1.3 percent from a previous estimate of 1.4 percent.

In 2006, global oil consumption is forecast to average 85.1 million barrels per day, an additional 1.8 mbd compared with 2005, the IEA said.

Beirut,01 23 2006
The Daily Star
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