US crude rises over $2/bbl on Iran-Israel tensions

23 June 2008 10:39  [Source: ICIS news]

SINGAPORE (ICIS news)--Crude prices gained more than $2/bbl on Monday to climb above $137/bbl, on supply concerns amid escalating tensions in the Middle East between Israel and Iran over the latter’s nuclear programme.

 

At 08:53 GMT, August NYMEX light sweet crude futures traded at $137.05/bbl, up $1.69/bbl on last Friday’s settlement level. Earlier the contract hit a high of $137.50/bbl, up $2.14/bbl.

 

At the same time, August Brent on London’s ICE Futures was trading at $136.64/bbl, up $1.78/bbl on Friday’s settlement price. Earlier it hit a high of $137.24/bbl, up $2.38/bbl.

 

Concerns over possible Israeli military strikes on Iranian nuclear facilities and a resultant response by Iran outweighed more positive news on supply issues which emerged over the weekend.

 

Oil consumers were concerned over possible supply disruption from Iran, the world's fourth-biggest exporter if tensions continued to escalate. Iran has the potential to cut its own exports and also blockade the Straits of Hormuz - the main export route for other Gulf producers.

 

At the weekend oil summit in Jeddah for leading producers and consumers, Saudi Arabia confirmed that it would raise output in July to 9.7m bbl/day, up 550,000 bbl/day on May output. The world’s leading exporter also announced that it could move to increase capacity to 15m bbl/day if demand levels were strong enough justify it.

 

Meanwhile, Nigerian militants - whose activities had targeted oil pipelines - also announced over the weekend a unilateral ceasefire from 24 June.

 

Meanwhile, OPEC President Chakib Khelil said on Monday there was no requirement for increased production as demand and supply were balanced. He said that prices would remain high until the end of the year due to a combination of geopolitics, speculation, the weak dollar and European Central Bank policy.

 

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By: James Dennis
+65 6780 4359

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