Crude oil rose to a record US$84.05 a barrel in New York on concern Turkey may seek to quell Kurdish rebels by invading northern Iraq, a country with the world's third-largest oil reserves.
Turkish Prime Minister Tayyip Erdogan said his country would pursue the Kurdistan Workers Party, regardless
of diplomatic costs, according to an Agence France-Presse report.
Northern Iraq holds some of the country's largest oil fields, including Kirkuk, the source of much of Iraq's exports.
The intraday high was less than a dollar from the all-time inflation adjusted high reached in 1981 when prices jumped because Iran cut oil exports. The cost of oil used by United States refiners averaged US$37.48 a barrel in March 1981.
Commodity traders wield a greater influence on oil prices than Saudi Arabia and the world's other big suppliers, US Energy Secretary Samuel Bodman said. "The suppliers, to some degree, have lost control of the pricing."
Markets can move more on emotions than the fundamentals of supply and demand as traders take greater control of prices, Bodman said.
"It's all about money flow," said Kyle Cooper, director of research at IAF Advisers in Houston. "There is money and lots of it chasing commodities and thus prices are moving higher."
-Bloomberg
