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The week-old standoff between London and Tehran over the Iranian detention of 15 British naval personnel sent oil prices surging past 69 dollars here — a near seven-month high — and analysts warned they could rise further.
 
British Prime Minister Tony Blair said Friday that Britain wanted Iran to be “increasingly isolated” but vowed to be patient in managing the crisis.

In London trade, the price of Brent North Sea crude for May delivery reached 69.14 dollars a barrel — the highest level since September 4 last year.

It later Friday stood at 68.91 dollars in electronic trading, up 1.03 dollars.

New York’s main oil futures contract, light sweet crude for delivery in May, climbed 63 cents to 66.66 dollars in electronic deals before the official opening of the US market.

New York crude had Tuesday soared to 68.09 dollars — a level last seen in early September — on rumours of military conflict with Iran.

“It wouldn’t surprise me if we saw 70 (dollars a barrel) quite easily or beyond,” said Simon Hayley, senior international economist at Capital Economics.

Iran is the world’s fourth biggest producer of crude oil and some analysts believe there is a risk that the Islamic Republic could move to disrupt its exports should the crisis with Britain escalate.

“This has the potential to escalate into a full-blown crisis,” Bank of Ireland analyst Paul Harris said.

“The fact that the (strategic Iran-dominated) Straits of Hormuz could come into play is a risk, given that the majority of oil traffic goes down this channel.”

Prices have surged this week as Britain froze ties with Iran after it refused to release 15 British sailors and marines it had captured on March 23. Iran insists that the personnel were detained for being in Iranian waters but Britain maintains they were inside Iraqi waters.

Further fuel has been added to oil prices since Thursday when Iran decided against releasing the only female British sailor held among the 15.

A defiant Iran said it would not release as promised Faye Turney because of Britain’s “incorrect” attitude in the growing crisis between the two countries.

Oil prices are also being supported by Iran’s refusal to bow to international pressure over its disputed nuclear programme.

Traders said some people were guilty of widening the geopolitical premium by pushing the price up prematurely.

Hayley of Capital Economics said prices were trading at about 5.0 dollars above the level they would be if traders reacted solely to the fundamental factors of crude’s current supply and demand.

Despite the week’s spike to crude — prices have shot by about 6.0 dollars or more than 9.0 percent since last Friday — they remain a long way off record highs of above 78 dollars a barrel struck last year.

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The United States could use its large Strategic Petroleum Reserve to counter a short-term disruption in Middle East Gulf oil shipments caused by tensions with Iran, the head of the U.S. Energy Information Administration said Wednesday.

“We have substantial emergency supplies” of oil to offset problems in Gulf shipping,” EIA’s Guy Caruso told reporters.

Oil prices shot up this week as traders worried that a dispute the West has with Iran’s nuclear program and Iran’s continued holding of U.K. Royal Navy personnel could escalate and result in disruptions to shipping through the Strait of Hormuz, which handles about a third of the world’s seaborne oil shipments.

“There is no need to panic” among oil traders over possible Gulf oil shipping disruptions, Caruso said.

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Gulf rumours send US crude to six-month high

Escalating geopolitical tensions and tightening supply caused a jump in oil prices Wednesday, taking US crude futures to a six-month high.

The initial spike was dramatic. Traders said the oil price jumped $5 a barrel – more than 7 per cent – in just seven minutes shortly after the close of US trade on Tuesday, caused by rumours that Iran had fired a missile at a US warship in the Persian Gulf.

The rumour was swiftly denied by the US, but crude prices remained more than 2 per cent higher Wednesday, reminding investors of the fragile geopolitical situation in the Gulf. Edward Meir at Man Financial said: “Although the missile story turned out to be false, the Iranian abduction of British sailors is very real and has yet to play itself out.”

Markets have become increasingly nervous after 15 British sailors and marines were captured last week. Since then, Nymex crude has risen by nearly 13 per cent on fears the situation would not be solved diplomatically.

Oil prices were also supported by an unexpectedly sharp tightening in supply as data from the US energy department showed stockpiles of crude in the US decreased by 900,000 barrels last week. Crude inventories were expected to have increased by about 1.1m barrels during the period.

Kevin Norrish at Barclays Capital said: “The nervousness of the market in response to the steady ratcheting up of tension with Iran, and a tightening fundamental background provides further evidence that oil price risks are becoming heavily skewed to the upside.”

By midday in New York, Nymex West Texas Intermediate for May delivery was up $1.53 to $64.46 a barrel, while May ICE Brent climbed $1.53 to $66.13.

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Oil Prices Hover Above $64 a Barrel As Tensions Between Iran, the West Leave Markets Jittery

Oil prices rose by more than US$1 a barrel Wednesday but were still below an earlier spike of more than US$5 a barrel on rumors that Iran had fired a missile at a U.S. ship in the Persian Gulf.

The U.S. military denied the reports. Still, rumors about a military confrontation spurred panic buying in after-hours trading Tuesday, sending oil prices above US$68 in a matter of minutes. Rising tensions between Iran and the West have created a potentially dangerous situation in the Gulf and markets are jumpy.

Prices fell back within a couple hours, although they remained higher than Tuesday’s settlement price of US$62.93 a barrel. Another possible calming factor was word from Iran’s foreign minister that a detained female British sailor would be freed on Wednesday or Thursday.

Light, sweet crude for May delivery was up US$1.13 at US$64.06 a barrel by afternoon in Europe in electronic trading on the New York Mercantile exchange. Brent crude for May delivery rose US$1.19 to US$65.79 a barrel on the ICE Futures exchange in London.

“The major concern is that if the rumor had been true, you’d have a major disruption to supply,” said Andrew Harrington, an analyst with ANZ Global Natural Resources in Sydney. “You have about a quarter of the world oil coming through the Straits of Hormuz and any military conflict would severely disrupt those supplies, which obviously sees the price spike.”

The surge indicates the nervousness in markets, he said.

“The political premium had been taken out of the price, and as soon as any signs of new development takes place, they get put back into the price,” Harrington said.

Traders were also awaiting U.S. government oil inventories data due later in the day. The U.S. Energy Department’s report is expected to show a gain of 1.1 million barrels in crude oil inventories in week ending March 23, according to analysts polled by Dow Jones Newswires.

Gasoline supplies are expected to decline by an average of 1.8 million barrels, while distillate stocks — which include heating oil and diesel fuel — are expected to dip by 800,000 barrels.

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We all know from reading the articles on GasHostage.com that oil companies are making record profits at our expense and they have no intentions of lowering prices. We also know that though the costs associated with obtaining oil today has increased; it is no where near the level that the oil companies have been espousing over the last 10 years.  Oil is NOT in danger of running out anytime soon!  We have plenty of oil and gas reserves, and many untapped new drilling sites, but the oil giants want us to believe that oil is scarce or hard to drill so they can continue to RAISE our prices.

Not only have the oil and gas giants been treating the general consumer poorly, but they also take advantage of the countries they get their oil from.  Many times they simply take the oil from financially unstable countries, by offering huge promises of wealth and actually only providing a fraction of the contracted price. 

The oil and gas companies have grown so large and come to dominate the economic landscape across the entire planet.  Fighting them will be difficult, but not impossible.  As consumers it will be in our interest to discover ways to impact the very core of these large companies and make a statement that we will not tolerate their ways any longer!

Recently we came across a plan to force the oil and gas companies to lower prices.  The idea is to boycott the largest producers of Gas and Oil in your country.  With that in mind, oil companies will be forced to either lower the price to get their products onto the market, or to sit on their reserves and eat billions of dollars in sales.

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All of a sudden, the oil sands in Alberta, Canada have become a veritable “black gold” mine. And Big Oil’s heavy hitters are wishing they acted sooner…

Just three years ago, when the average price of crude was $29.63 a barrel, producers didn’t find the profits to be worth the costs of processing the oil sands.

But improvements in mining technology have dramatically reduced the cost of extraction, rocketing bottom lines skyward. According to news from the Oil Sands Discovery Centre in Alberta, it now costs an average of just $13.21 to process each of the 2.5 trillion barrels of oil embedded in the sands – a reserve 8 times bigger than Saudi Arabia’s… containing more oil than all OPEC nations combined.

Now, Big Oil companies that didn’t get in early can only sit by and watch as “savvy oil” laughs all the way to the bank. With crude selling for $60-plus, revenues at Albert’s premier oil sands producers are rocketing skyward.

 

Oil prices rose further Thursday building on gains the day before caused by a report showing declining U.S. crude inventories.

The upward trend reflected traders’ attention with short-term developments – falling supplies over concerns over slowing economies in the United States and elsewhere.

Light, sweet crude for April rose 53 cents to $62.32 a barrel by noon in Europe in electronic trading on the New York Mercantile Exchange.

On Wednesday, prices hit a two-month high following a U.S. government report that stockpiles of gasoline and distillates, which include heating oil and diesel fuel, dropped last week by a larger amount than analysts had forecast.

Iran’s persistent refusal to suspend its nuclear program has also been a driving force behind the energy market’s advance.

The gains in the oil market came despite a big drop Tuesday in U.S. share prices on worries about an abrupt economic slowdown. The fall was triggered partially by a 9 percent drop in Chinese shares amid speculation that Beijing may take further steps to slow China’s rapid growth.

Markets have since started to bounce back.

But early concerns that U.S. and Chinese fuel demand growth could slow were offset by the release of Wednesday’s U.S. inventories report.

“The oil market has essentially brushed off the correction in the equities market and is focusing on the U.S. inventory report, which was quite bullish,” said energy analyst Victor Shum, of Purvin & Gertz in Singapore.

U.S. crude inventories climbed 1.4 million barrels to 329.0 million barrels last week, the Energy Information Administration said Wednesday in its weekly report. But gasoline inventories fell by 1.9 million barrels to 220.2 million barrels, and distillate inventories fell by 3.8 million barrels to 124.5 million barrels. Both drops were a bit larger than most analysts were expecting.

Shum said, however, that the stock market and economic concerns had contributed to slow trading in the oil market.

“I think in the near term we can expect a lot of volatility in the oil market,” Shum said, noting continuing concerns over Iran.

Iran ignored an IAEA deadline last week to halt its nuclear program. Iranian Foreign Minister Manouchehr Mottaki reiterated Tuesday that his country would never again suspend uranium enrichment, a move the United States insists on for any negotiations with Tehran.

Vienna’s PVM Oil Associates noted that “the bullish influence” generated by Wednesday U.S. inventory figures “more than offset the adverse impact of data showing weaker than expected U.S. economic growth for the fourth quarter 2006 as well as concerns about the health of the global economy.”

In other Nymex trading Thursday, natural gas futures rose 1.17 cents to US$7.317 per 1,000 cubic feet. Heating oil futures under the new April contract traded at US$1.7897 a gallon (3.8 liters), up by just over a penny.

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