Oil prices hover near all-time high
April 18, 2006
Singapore - Crude oil prices crept closer to the record high of $70.85 a barrel in Asian trade on Tuesday after a suicide bomb attack in Israel compounded tensions over Iran's nuclear program, dealers said.
Falling gasoline inventories in the United States ahead of the summer driving season helped push prices higher, they said.
At 2.35pm, New York's main contract light, light sweet crude for May delivery, was up 29 cents at $70.69 a barrel from its close of $70.40 in US trading Monday.
Intra-day electronic trade reached a high of $70.78, just seven cents off the record high reached on August 30 last year when Hurricane Katrina hammered oil production facilities in the US Gulf of Mexico region.
"Once the psychological level of 70 dollars was breached, there was momentum which spurred fresh buying," said Victor Shum, a Singapore-based analyst with global consultancy Purvin and Gertz.
"Passing the 70.85 dollar level is inevitable."
The US administration said Monday that Iran's announcement that it was working on advanced P-2 centrifuges to enrich uranium was a further signal that the Islamic republic's nuclear program is not purely civilian.
Iran's announcement comes on the back of escalating tensions over Tehran's alleged nuclear weapons research program.
Further fuelling tensions in the region was a suicide bomb attack in Israel's commercial capital of Tel Aviv late Monday which left left nine people dead and dozens wounded.
The blast -- the deadliest since a suicide bombing in August 2004 -- was claimed by the Palestinian militant group Islamic Jihad, which has been behind all of the most recent bomb attacks in Israel.
Shum said the attack and the Iranian nuclear row are reflective of the political volatility in the oil-producing Middle East which has fuelled fears of supply disruptions in the event of a conflict.
"With all these events in the Middle East, prices hit the psychological level of 70 (dollars) and settled above it," Shum said.
As oil prices soared, officials representing the five permanent UN Security Council members -- Britain, China, France, Russia and the United States -- and Germany prepared to hold talks in Moscow on how to proceed on the Iran nuclear issue.
The Security Council on March 29 gave Iran 30 days to suspend uranium enrichment activities. The head of the UN nuclear watchdog, the International Atomic Energy Agency, visited Iran last week and was due to report back to the Security Council before April 29.
Security Council members are however divided on how to deal with Iran, with press reports suggesting the United States was considering a military strike against Iran's uranium facilities as an option.
Dealers said a military strike could disrupt crude supplies from Iran, which is the world's fourth-largest producer of crude with output of four million barrels per day.
Fiery rhetoric from Iranian officials have not helped cool down tensions.
Speaking during a visit to Kuwait on Monday, Iran's influential former president Akbar Hashemi Rafsanjani said he was sure the Islamic republic's Gulf neighbours would not support any US assault on his country.
Iran's top envoy to Russia said his country was prepared for war if attacked.
"One way to avert war is to be prepared for any war," Iranian Ambassador Gholamreza Ansari was quoted by Russian news agencies as saying on Monday.
While Iran will "make a maximum effort" to avoid conflict, "Iran has been, is and will be prepared" for war, he said. - AFP
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