Supply fears fuel trading frenzy and record oil prices
Lloyds List; Apr 12, 2006
OIL prices climbed to record levels yesterday on the back of supply fears in Nigeria and Iran, writes Martyn Wingrove.
Traders in London and New York ploughed into the market to buy light crude oil as they anticipated growing demand for gasoline in the summer and a shortfall in capacity.
Fears of a disruption in supplies due to continued troubles in Nigeria and a confrontation in Iran pushed London's Brent crude prices to all-time highs.
The price rose to $69.70 a barrel yesterday morning before trading down to $69.40. In New York, the market opened with US light oil priced at $68.80 per barrel.
There are concerns that Iran, a key member of the Organisation of Petroleum Exporting Countries could reduce oil exports as a weapon against any action to halt its nuclear development programme.
It is thought the Asian nation will announce an achievement in the programme to enrich uranium that could lead to sanctions from Western powers.
US President George Bush has dismissed reports that he is seeking military strikes on the Islamic Republic, which pumps out around 4m barrels of oil per day, to halt the nuclear programme.
In the background to this, traders remain concerned over the lower levels of oil exports from Nigeria, another key member of Opec, as tribal attacks on Shell's facilities has shut-in 500,000 barrels per day of output, or one suezmax tanker every two days.
Despite these incidents and fears, members of Opec, including Nigeria, Iran and Iraq were producing on average 29.75m barrels per day in March, up slightly from the February average.
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