Iran General NewsOil rises to record over $92 after U.S. says...

Oil rises to record over $92 after U.S. says Iran backs terror

-

Bloomberg: Oil rose above $92 a barrel for the first time in New York after the U.S. accused Iran’s military of supporting terrorism and stepped up pressure on foreign companies to cut ties with the Middle East oil producer. By Alexander Kwiatkowski

Oct. 26 (Bloomberg) — Oil rose above $92 a barrel for the first time in New York after the U.S. accused Iran’s military of supporting terrorism and stepped up pressure on foreign companies to cut ties with the Middle East oil producer.

Crude oil also rallied as Turkey warned of a wider military assault into northern Iraq and OPEC officials yesterday said record prices didn’t justify a further increase in crude production.

“The door is open to $100,” said Kevin Norrish, energy analyst at Barclays Capital Inc. in London. The dispute between the U.S. and Iran will “continue to ratchet up in terms of tension.”

Record prices boosted profits at oil companies including Royal Dutch Shell Plc and Petro-Canada last quarter, while increasing costs for consumers buying gasoline and other fuels. Ticket prices for intercontinental business-class flights will climb by as much as 8 percent next year as airlines pass on jet fuel costs, American Express Co. said in a forecast this week.

Crude oil for December delivery rose as much as $1.76, or 2 percent, to $92.22 a barrel in electronic trading on the New York Mercantile Exchange, the highest since oil futures began trading in 1983. It pared gains to trade at $91.28 at 1:10 p.m. London time.

Oil prices earlier this month passed the previous all-time inflation-adjusted record reached in 1981, when Iran cut exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, the Energy Department said, or $84.73 in today’s money.

Nervous Situation

“The Iranian situation is one to be very, very nervous on,” said Rob Laughlin, a senior broker at MF Global Ltd. in London. “OPEC could try to cool things down” by adding more oil, he said.

Brent crude oil for December settlement rose as much as $1.82 to a record $89.30 a barrel on the London-based ICE Futures Europe exchange. It was at $88.16 at 1:09 p.m. local time.

Record oil prices are causing other energy commodities such as electricity to reach new highs, raising concerns that inflation will accelerate and suppress growth in the global economy. The Group of Seven industrial nations said in a statement last week that high crude levels will moderate growth.

“Growth in OECD countries will be dented by these kinds of levels already,” said Eugen Weinberg, a commodities analyst at Commerzbank AG in Frankfurt. “We’ll probably see some slowdown and some negative effects from the oil price.”

Electricity prices in Germany, Europe’s biggest market, rose to a record for a second day. Next-year power traded as high as 61.95 euros a megawatt hour, according to data from GFI Group Inc.

Electricity Higher Too

Supply agreements for fuels including natural gas are linked to the crude price with a time lag of about six months, meaning today’s record oil prices will lead gas-fired generators in Germany to pay more for their fuel in 2008.

U.S. gasoline prices could rise more than the seasonal norm in November if crude oil prices remain at about $85, economists at the Federal Reserve Bank of Dallas said Oct. 24. Gasoline stockpiles fell 1.93 million barrels to 193.8 million barrels last week, in the eighth decline in 14 weeks, according to figures released by the U.S. Energy Department.

The Bush administration yesterday announced new sanctions against Iran that designate the Iranian Revolutionary Guard Corps as a proliferator of weapons of mass destruction and its Quds force as a supporter of terrorism.

“The energy markets are taking note of this rhetoric with some justifiable alarm,” Edward Meir, an analyst at MF Global Ltd. in Connecticut, said in a report today. “The thinking is that the Bush administration could be laying the ideological framework for a preemptive strike against Iran.”

Key Exporter

The U.S. is trying to get Iran to halt uranium enrichment that it suspects is aimed at developing nuclear weapons. Iran, which holds the world’s second-largest oil and natural gas reserves, says it wants to enrich uranium to produce electricity. The dispute has bolstered oil prices since January 2006 because of concern that oil shipments from the country might be cut.

“Anything that happens in Iran is important to the market because of its position as a key exporter,” said Michael Davies, an analyst at Sucden (U.K.) Ltd. in London. “The sanctions are going to be yet another thing to encourage the bulls.”

Turkey said it may step up military action against Kurdish forces in northern Iraq and called on the U.S. to join the fight. Shelling by Turkish artillery of the Iraqi side of the border continued yesterday, CNN Turk reported.

The Organization of Petroleum Exporting Countries, supplier of more than 40 percent of the world’s oil, has said record oil prices don’t justify raining production beyond the increase it has previously pledged. OPEC said last month it will raise output by 500,000 barrels a day from Nov. 1 to alleviate concern that demand is outpacing supply.

The group doesn’t plan additional output increases, Venezuelan Energy Minister Rafael Ramirez told reporters in Caracas yesterday. OPEC’s Secretary-General Abdalla Salem El-Badri said yesterday in Beijing that “there is a lot of oil in the market, nothing wrong with the fundamentals.”

Norrish of Barclays Capital Inc. said OPEC has “plenty of spare capacity to raise output” further, if it wanted to.

Latest news

The Role of Students and Universities in Iran’s Nationwide Uprising

In the national uprising of the people of Iran, which started in mid-September this year, the students played a...

Snapback Sanctions, a Must Response to Iran’s Human Rights Abuse and JCPOA Violations

The protests in Iran have been going on for more than two months, even though the regime is cracking...

Growing Disintegration Among Iran Regime’s Forces

Iran has been shaken by a wave of nationwide protests since mid-September. The trigger was the death of the...

Grim Tidings for Iran’s Regime After Approval of UN Fact-Finding Mission

After many discussions and debates, the United Nations Human Rights Council has approved a fact-finding mission to investigate the...

Iranian People’s Resistance Changed the Appeasement Policy

Soon after the new US government started its obligations in January 2021, hand in hand with the European governments...

Khamenei’s Disgraceful Campaign Against Piranshahr and Javanrud, Who Will Be the Loser?

On the 67th day of Iran’s revolution, the Iranian regime attempted to put a halt to the protests in...

Must read

Man lashed in public near Iran capital

Iran Focus: Tehran, Iran, Apr. 26 – A young...

Brent trades near nine-month high; Iran won’t cede on nuclear

Bloomberg: Brent traded near a nine-month high in London...

You might also likeRELATED
Recommended to you