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.