Uncertainty forces oil prices to record high

Uncertainty forces oil prices to record high

Perrine Faye, Agence France-Presse, London

Oil prices on Monday struck record high points close to US$63
on supply concerns, as an unspecified threat caused the United
States to shut its embassy in Saudi Arabia -- the world's biggest
exporter of crude.

New York's main contract, light sweet crude for delivery in
September, gained 38 U.S.cents to $62.69 per barrel in electronic
dealing after striking a record $62.90.

That beat the previous high of $62.50 reached last on
Wednesday after US refineries were hit by disruptions.

In London, the price of Brent North Sea crude oil for delivery
in September rose 43 U.S.cents to $61.50 per barrel after earlier
hitting a record $61.76.

The contract's previous historic peak was $61.26, reached also
last on Wednesday.

"There's uncertainty in the market," a trader at Bache
Financial said.

"People are worrying about terrorist action or disruption of
oil supplies in Saudi Arabia."

The U.S. embassy in the Gulf kingdom had said on Sunday that
its premises in Riyadh as well as two consulates would shut until
Wednesday in response to an unspecified threat.

"In response to a threat against U.S. government buildings in
the kingdom the U.S. embassy in Riyadh and the U.S. consulates
general in Jeddah and Dhahran will be closed on Aug. 8 and 9," it
said, without providing further details.

The U.S. embassy warned on July 20 that terrorists could
strike again in Saudi Arabia, which has been rocked by a spate of
bloody attacks attributed to Al-Qaeda militants in the past two
years.

The British Foreign Office on Monday warned Britons traveling
to Saudi Arabia that the terrorist threat there remains high and
that there are "credible reports" of further attacks in the near
future.

Saudi Arabia is the world's biggest oil exporter, producing
about 9.5 million barrels per day and has the capacity for an
additional daily quota of 1.5 million.

A week ago the kingdom's King Fahd died in hospital after a
long period of ill health that saw him hand over the reins of
power in the last years of his turbulent rule.

Fahd's death had provided only limited support to oil prices,
with the event seen as unlikely to disrupt energy production in
Saudi Arabia.

Oil prices are 40 percent higher than a year ago. However
adjusted for inflation, they remain far below levels reached in
the wake of the 1979 Iranian revolution when prices surged to
upwards of $80 a barrel in today's money.

Prices had reached historic peaks last week owing to
disruptions at U.S.efineries, which are battling to provide
sufficient gasoline and heating fuel to meet robust demand,
particularly from the northern hemisphere. The United States is
the world's biggest consumer of energy.

"Some refineries are down for maintenance but there a lot of
general problems," Invested analyst Bruce Evers said on Monday.

The failure by oil giant ExxonMobil to restart its 245,000
barrels-per-day refinery in Joliet, Illinois, as scheduled last
on Thursday, was particularly compounding worries of a supply
disruption, dealers said.

Although consumers have access to large supplies of heavy,
sour crude, refiners prefer light, sweet oil -- such as Brent
North Sea -- because of its low sulphur content and relatively
high yields of gasoline, heating oil as well as diesel and jet
fuel.