World oil prices reached new peaks on Thursday, above $74 in London and $72 in New York owing to low stocks of gasoline in the United States and tensions over Iran’s nuclear programme.
In London, the price of Brent North Sea crude for June delivery struck a record high of $74,22 per barrel. New York’s benchmark contract for light sweet crude for May delivery hit an all-time peak of $72,49.
At about 11.05am GMT, Brent stood at $73,77, up four cents on Wednesday’s close, while New York crude was at $72,26, up nine cents.
Adjusted for inflation, current oil prices remain below levels reached after the 1979 Iranian revolution. According to Barclays Capital, in November 1979 crude prices surged to a high of $87,23 per barrel in today’s money.
”Brent crude hit a new record high above $74 … on concern about the drop in US gasoline stocks and on concern that Iran’s ongoing nuclear row with the West will cut oil supplies,” said analysts at the Sucden brokerage firm in London.
Brent North Sea, which is a light sweet crude, is the price reference for two-thirds of the world’s traded oil according to the Intercontinental Exchange, which operates the trading of Brent.
The US Department of Energy had said on Wednesday that US gasoline (petrol) stockpiles fell by 5,4-million barrels last week, twice analysts’ forecasts and ahead of the peak demand season for motor fuel.
The fall in gasoline stocks comes ahead of the driving season in the US, which sees American drivers take to the roads on vacation beginning in May.
French Energy Minister Francois Loos asked the European Union on Thursday to publish data on the bloc’s own oil stocks also on a weekly basis, instead of every month, arguing the switch would alleviate pressure on prices.
”We need to show that oil production is sufficient in relation to consumption,” Loos told a press conference in Paris. ”That will dissuade speculators from driving up prices.”
Elsewhere, the market tracked events over Iran, the world’s fourth-biggest crude producer.
”Besides the fundamental supply and demand information, prices are driven by the emotional momentum of the Iranian issue,” said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore. ”The market is nervous because of the recent heated rhetoric from Iran and the US. The rhetoric is causing prices to stay above $70.”
The head of the International Energy Agency (IEA) said late on Wednesday that market speculation has amplified oil price spikes but that the root cause of high prices is the lack of a production safety cushion.
”The market is perfectly well supplied at the moment, but spare capacity is very limited,” IEA executive director Claude Mandil said.
Regarding Iran, world powers who met on Wednesday in Moscow for a second day of talks failed to agree on how to halt the country’s nuclear drive. Russia and the US remained divided over the imposition of sanctions and possible use of a military strike.
US Secretary of State Condoleezza Rice said on Wednesday that although diplomatic avenues will be fully explored, ”we have to contemplate diplomacy failing; I believe we have options at our disposal”.
Washington has accused Iran of working secretly to build nuclear weapons under cover of a nuclear energy programme it is developing with Russian assistance.
Iran denies this charge and says the programme is strictly for producing nuclear energy.
Security analysts have said that in the event of a conflict, Iran could block the Strait of Hormuz, a strategic choke-point for oil exports to Japan, the US and Western Europe. — Sapa-AFP