Oil hits record near $147 as supply fears intensify
Santosh Menon, Reuters
Published: Friday, July 11, 2008
LONDON (Reuters) - Oil leapt $5 to a new record high near $147 a barrel on Friday, spurred by growing worries of threats to supplies from Iran and Nigeria and the possibility of a strike by Brazilian oil workers next week.
U.S. crude was $4.85 at $146.50 a barrel by 9:15 a.m. EDT, off highs of $146.90, taking gains in just two sessions to over $10. It rose $5.60 or 4 percent a barrel on Thursday in a late burst of buying activity.
London Brent crude was up $4.74 at $146.77 a barrel.
Leading the oil complex was ICE gas oil futures which climbed to a new record high of $1,336.75 a tonne amid strong demand for diesel and aviation fuel.
Analysts said the threat of supply disruptions provided the bullish backdrop, as the demand picture was unlikely to change much until after the Beijing Olympics.
"We continue to believe that the downside risk to oil prices remains relatively low until the non-OECD countries begin to show greater price and income elasticity response than has been evident to date," Deutsche Bank analyst Adam Sieminski said in a note.
Oil, which had been on the retreat for much of the week, reversed course on Thursday as fears of supply disruptions from potential hot spots, OPEC members Iran and Nigeria, resurfaced.
A spate of missile tests by Iran, the world's fourth-largest oil exporter, in the last two days against a backdrop of rising tensions with Israel and the United States has left the oil markets worried.
Iran has threatened to strike back at Tel Aviv as well as U.S. interests in a key oil shipping route if it is attacked over its nuclear programme, which Israel and the West fears is aimed at making nuclear weapons.
The United States said it was ready to defend its allies.
The Movement for the Emancipation of the Niger Delta, the main militant group in Nigeria's oil-producing region, said it was abandoning a ceasefire to protest against a British offer to help tackle lawlessness in the region.
Rebel attacks on oil infrastructure in Nigeria, the world's eighth-biggest exporter, have also been partly responsible for the nearly 50 percent rise in prices this year.
Investors have also flocked to oil and other commodities this year as a hedge against rising inflation and a weak dollar.
Workers at Brazil's Petrobras threatened to launch a five-day strike next week that would affect all 42 Campos basin offshore platforms, which account for more than 80 percent of daily oil output of around 1.8 million barrels.
Oil has continued rising despite efforts by top exporter Saudi Arabia to raise production to its highest rate in three decades in an effort to tame oil prices.
Qatar Oil Minister Abdullah al-Attiyah told Reuters on Friday that he saw no demand for the additional crude that Saudi Arabia had pledged to pump.