NEW YORK - Oil prices surged on Friday to the highest level since September's hurricanes crippled oil output from the Gulf of Mexico, as tensions mounted over Opec-member Iran's nuclear ambitions.
US crude oil gained US$1.52 to US$68.35 a barrel after hitting a peak of US$68.80 - the highest level
since Sept. 2, while London Brent crude rose US$1.20 to US$66.43.
Crude prices have jumped more than 8 per cent so far this year, bringing them within striking distance of the record US$70.85 hit Aug. 30 after Hurricane Katrina toppled rigs and slashed output from the Gulf of Mexico.
"The market is so delicately balanced," said Mark Keenan of MPC commodity fund. "It faces a convergence of bullish factors."
A senior Iranian official said on Friday that Tehran is transferring its assets from European accounts to other foreign banks in an attempt to preempt possible UN sanctions for resuming its nuclear programme.
US and European Union leaders suspect Iran, the world's fourth largest oil exporter, of seeking to build atomic bombs under the cloak of a civilian nuclear energy programme. Analysts are concerned the dispute could lead to a disruption in Iran's crude exports.
US Energy Secretary Samuel Bodman said on Friday he was hopeful that Iran would change course and halt its plans to develop its nuclear programme in the face of international pressure.
Adding to worries in the crude market, more than 220,000 barrels per day of oil have been shut in Nigeria due to civil unrest, and militants Friday warned they would soon resume attacks on oil producers in the country.
And cold weather in Russia led Moscow to cut natural gas supplies to Europe and trim some oil production.
"Severe winter weather in parts of Europe and much of northeast Asia limits import potential going forward, just as US weather should get colder and production plunges as refineries carry out winter maintenance," said Jan Stuart, economist at UBS.
Expectations that supply problems will support crude prices for the foreseeable future are reflected in record values for oil to be delivered at dates far from now.
On the New York Mercantile Exchange this week, contracts as far out as 2012 hit record levels and monthly contracts from June 2006 to June 2007 have risen to around US$70.
Despite the price surge, there is no sign of demand falling.
The Organisation of the Petroleum Exporting Countries on Friday forecast oil demand growth in 2006 would be 1.6 million bpd. World demand is expected to reach 84.8 million bpd this year compared with 83.2 million bpd in 2005.
The producer group, which meets at the end of the month to review its output policy, is considered unlikely to cut production, though the hawkish Iran said Friday that the market was oversupplied.
Adding some support to gains Friday, the United States said it would loan some crude from the emergency reserve to oil refiner Total Petrochemicals Inc. for its plant in Port Arthur, Texas, hit by an oil shipping disruption.
- REUTERS
NEW YORK - Oil prices surged on Friday to the highest level since September's hurricanes crippled oil output from the Gulf of Mexico, as tensions mounted over Opec-member Iran's nuclear ambitions.
US crude oil gained US$1.52 to US$68.35 a barrel after hitting a peak of US$68.80 - the highest level
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