Oil prices rally on tight supplies, Iran fears

AFP
Thursday, July 10, 2008

LONDON (AFP) — Oil prices shot higher Thursday on the back of simmering geopolitical tensions about key producer Iran and lingering worries over stretched global crude supplies, traders said.

The International Energy Agency (IEA), meanwhile, forecast that tension on oil markets was set to ease early next year amid an economic slowdown in the United States.

In addition, the OPEC oil producers’ cartel cut its estimate for world crude demand over the next two decades, predicting that high prices would compel consumer countries to be more efficient in their use of the precious commodity.

New York’s main oil contract, light sweet crude for August delivery, was up 1.53 dollars to 137.58 dollars per barrel.

Brent North Sea oil for August added 1.09 dollars to 137.67 dollars.

“Investors were not ready to liquidate their crude positions just yet, with persistent geopolitical fears and worries over long-term crude supply tightness,” said Sucden analyst Andrey Kryuchenkov.

Prices have soared since breaking through 100 dollars at the start of the year but are down about 10 dollars from record peaks near 147 dollars last week.
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Traders tracked events concerning Iran, which is OPEC’s second-largest crude oil producer with an output of about 4.0 million barrels per day.

Iran test-fired more weaponry on Thursday as it continued war games, ignoring global concern over its launch of a broadside of missiles amid efforts to end the crisis over its nuclear programme.

The White House on Thursday downplayed the risk of war between Iran and the United States, despite the Iranian missile tests and some tough talk by US Secretary of State Condoleezza Rice.

Rice warned Iran on Thursday that Washington had beefed up its security presence in the Gulf and would not hesitate to defend Israel and other allies in the region.

Iran, which is a member of OPEC, insists its nuclear drive is aimed solely at generating energy but the West fears it could be aimed at making an atomic bomb and has called for a freeze of uranium enrichment.

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3 Responses to “Oil prices rally on tight supplies, Iran fears”

1. nikoli Says:
   July 11th, 2008 at 3:21 am

   we will never see low oil prices again….
   opec has had a lick of the ice cream…. taste of real money…
   opec wants the whole ice cream…. they tasted and enjoyed….

   if you want low oil prices… then get rid of opec….

   they won’t bring oil down… that will be profit lost….
   you don’t do something to loose profit…

   imagine niagra falls…. now imagine how much money pours into opec countrys…

   the more oil they pump out, won’t bring prices down….
   but will make more money for the country that pumps more oil…

2. GARKO FACTOR Says:
   July 11th, 2008 at 10:47 pm

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3. GaryCol Says:
   July 11th, 2008 at 11:02 pm

   There is no shortage of supply. OPEC has stated that repeatedly. There is also no such thing as Peak Oil on a global level. So why the high prices? Well if you look at any chart that tracks price rises there was a sharp increase in 1974 and the global consumers were silly enough to pay it. Sure they bitched and moaned but still paid. That gave the green light for even higher prices. Speculators got into the act in a much bigger way. It is argued that these players give equity to the markets. But how can they when they never take delivery of one drop of oil let alone pay for what they have purchased. All sales (as I understand it)are made on a 10% deposit and the balance is paid on delivery. The speculators have sold there stake beffore that happens.
   With the Creit crunch in August 2007, money was moved from the Stock Markets into commondities in a big way. Crude Oil and gold was the prefered commodity initially but it soon spread to all foods as well.
   With the media quoting commentators predicting $200 or high oil the public has become immuned to the high prices until they go to fillup their cars. It is not ony the cost of all fuels that is effected with high oil prices but a vast range of other produces from plastic through cloth to fertilizer.
   Does OPEC like the high prices? I dont think so in the long term as it will increase alternative supplies thus cutting their share of the world market.
   We will only see lowr prices again when there is not money to be made through speculation or the introduction of alternative energy sources.