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International conflicts pushing oil closer to 80 US dollars

From MercoPress

Oil prices hit a new high closing price of 76.70 US dollars a barrel on Thursday as international tension heightened in several fronts with analysts not ruling out 80 US dollars a barrel in the coming days.

The escalating conflict in Middle East; Iran’s nuclear row heading back to the UN Security Council; North Korea walking out of talks with South Korea; renewed worries over supply from major exporter Nigeria and crude inventories falling more than expected in the US have contributed to uncertainty and soaring prices.

The price of light sweet crude oil for August delivery was up 1.75 US per barrel from Wednesday’s close on the New York Mercantile Exchange. The previous high close for oil was 75.78 US on July 7. . London Brent was up $1.86 at $76.25 after reaching a record $76.31.

“Two years ago, I might have said that 70 or 75 US dollars a barrel would be some kind of a tipping point. Now I’m not so sure anymore,” said Nariman Behravesh, chief economist at Global Insight, a private forecasting firm.

Once inflation is factored in, the price of oil would still have to rise to about 90 US dollars a barrel to top the highs set a quarter-century ago in the supply crisis following the Iranian revolution and the Iran-Iraq war.

In Nigeria, two suspected explosions at a crude pipeline operated by Agip, a unit of Italy’s Eni, caused oil spills, Nigerian officials said. Royal Dutch Shell Plc has already had to shut down 473 000 barrels per day of Nigerian supply, almost a quarter of output in Africa’s top oil supplier, due to attacks by rebels.

Supply breaks and growing Middle East tension mean oil prices may rise further, investors say since the region pumps about a quarter of world output.

“The next stop is 80 US dollars” said Mark Matthias, chief executive of investment specialist Dawnay Day Quantum. “That’s what the market is looking at now”, he highlighted.

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