Oil prices breached $69 a barrel in Asian trading on Tuesday on concerns of a possible United States military strike against Iran, dealers said.
At 12.43pm (4.43am GMT), New York’s main contract, light sweet crude for May delivery was at $69,01 a barrel, up 27 cents from its close of $68,74 in the United States on Monday.
Dealers said the market ignored efforts by President George Bush to dismiss as “wild speculation” weekend reports that Washington was studying options for military strikes against Iran’s uranium facilities.
“Obviously some market participants are reacting to it and so this morning the market continues to be bullish about it,” said Victor Shum, an analyst in Singapore with global energy consultancy Purvin and Gertz.
The Washington Post and the New Yorker magazine reported over the weekend that the White House was exploring military options against Tehran which had vowed not to back down over its controversial nuclear programme.
Washington and its allies believe Iran is secretly trying to build a nuclear bomb, but the US administration went out of its way on Monday to play down the reports.
“The doctrine of prevention is to work together to prevent the Iranians from having a nuclear weapon,” Bush said.
Iran, the world’s fourth-biggest oil producer with an output of four million barrels per day, insists its nuclear programme is for civilian energy purposes.
Traders fear that action against the Islamic republic could severely disrupt the oil-rich nation’s crude exports.
Shum is not ruling out the possibility of prices climbing to $70 a barrel as there were other factors in play, including the approaching US summer driving season in late May when Americans take to the roads for their vacation.
The season typically sees demand for gasoline rising significantly and with recent US data showing a bigger-than-expected drawdown in petroleum stocks, prices may well hit the $70 mark, Shum said.
“The market already has an upside bias and this is on top of the fact that we have not entered the peak summer driving season in the US … $70 seems now so close,” he said.
US petrol stocks fell 4,4-million barrels to 211,8-million barrels in the week to March 31, far more than the consensus expected by analysts of 1,4-million barrels, according to the US government’s latest weekly report. – AFP