New high of world oil prices
World oil prices advanced again Thursday, rising to more than $48 a barrel. The price of this key commodity has risen by about a third just since the beginning of July. In London, oil closed at $43.80 a barrel, while in New York oil closed at $48.70, up three percent. The record prices were spurred on by renewed violence in Iraq, which some fear could cause an increase in sabotage in the country's oil infrastructure. There is also a lingering concern about the political uncertainty in Venezuela, the world's fifth largest oil supplier. Analysts are also worried about the fate of Russia's largest oil exporter, Yukos, which is engaged in an ownership dispute with the government. Oil demand continues to be strong, as rapid economic growth has boosted exports to Japan, China, India and the United States. The U.S. energy department this week reported a bigger than expected drop in U.S. oil inventories, informs VOANews. According the information of Detroit Free Press, crude futures plowed to a new high near $49 a barrel Thursday as the threat of sabotage to Iraqi oil infrastructure loomed larger than promises from Baghdad to boost exports in coming days. Those fears were amplified late in the day after Shiite militants broke into the headquarters of Iraq's South Oil Co. and set the company's warehouses and offices on fire, witnesses said. Underpinning the market's nervousness is the belief that the Organization of Petroleum Exporting Countries - Saudi Arabia in particular - does not have the ability to swiftly raise production high enough in the event of a major global supply disruption. U.S. light crude for September delivery rose $1.43 to close at $48.70 on the New York Mercantile Exchange - the highest Nymex settlement on record. When adjusted for inflation, oil is roughly $8 less per barrel than it was leading up to the first Gulf War. There were also technical factors behind Thursday's rally. Traders said those who had waited on the sidelines in recent weeks, hoping that prices would fall, came into the market as buyers on Thursday in order to secure next month's supply. The September contract expires Friday. After regular trading had ended on Nymex, witnesses in Basra said insurgents loyal to radical cleric Muqtada al-Sadr broke into the Iraqi oil company compound and burned its warehouses. The fire then spread to the company's offices. Those fears were amplified late in the day after Shiite militants broke into the headquarters of Iraq's South Oil Co. and set the company's warehouses and offices on fire, witnesses said. Underpinning the market's nervousness is the belief that the Organization of Petroleum Exporting Countries -- Saudi Arabia in particular -- does not have the ability to swiftly raise production high enough in the event of a major global supply disruption. U.S. light crude for September delivery rose $1.43 to close at $48.70 on the New York Mercantile Exchange -- the highest Nymex settlement on record. When adjusted for inflation, oil is roughly $8 less per barrel than it was leading up to the first Gulf War, informs Washington Post. After regular trading had ended on Nymex, witnesses in Basra said insurgents loyal to radical cleric Muqtada al-Sadr broke into the Iraqi oil company compound and burned its warehouses. The fire then spread to the company's offices. Earlier in the day, Iraqi oil minister Thamer al-Ghadhban said the country was prepared to resume pumping its capacity of 1.7 million barrels per day, up from current levels of about 1 million a day. "We will resume full south oil exports shortly," Ghadhban said at a news conference in Baghdad. Whether the attack in Basra would alter that plan was not immediately clear. Moreover, the impact of Ghadhban's announcement was minimized by heightened tensions in southern Iraq. Al-Sadr rejected a government ultimatum to immediately disarm his militia and pull them out of a Muslim shrine in Najaf without conditions. And as hopes of a quick cease-fire waned, fears of oil-pipeline sabotage rose.
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