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Oil price jumps to record over $120 a barrel


Oil price jumps to record over $120 a barrel

Katie Allen
The Guardian, Tuesday May 6 2008

Oil prices hit a fresh record above $120 a barrel yesterday, putting stock markets on course for another tumultuous week.

Worries about supply in Iran, Iraq and Nigeria helped US crude rise more than $3 to break through the $120 mark at one point. London Brent crude also rose more than $3 to almost $118 in thin bank holiday trading.

A weekend attack by militants on a Royal Dutch Shell plant in the Niger Delta and fighting in northern Iraq combined to intensify supply worries in oil markets.

Traders said that on the demand side there was support from stronger-than-expected jobs data out of the US last week. Although the dollar remained under pressure yesterday from continuing concerns about US growth, the unemployment figures forced market players to scale back forecasts of a slump in energy demand from the world’s largest economy.

Oil prices have risen 20% since the start of the year and are heaping pressure on companies around the world as they struggle to pass on higher energy bills to their customers.

In Europe yesterday, stockmarkets ended lower as traders fretted about the mounting burden on companies and US shares were also under pressure.

In a report out today, Hetal Mehta, of economic forecasting group the Ernst & Young Item Club, said: “The modest upswing Item was predicting over the next couple of years in GDP growth is predicated on an oil price remaining below that of $100 per barrel.”

Item forecasts that oil prices climbing to $150 would trim economic growth for 2009 from the prediction of 1.5% GDP growth to 1.1%. The following year, it and other commentators predict a strong recovery to 2.7%, but the group says high oil prices could cut that to below 2%. and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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