Oil price touches record of $75 a barrel amid concerns about Iran

Crude-oil prices reached a new record of $75 a barrel Friday amid concern about Iran's nuclear ambitions and declining U.S. gasoline stocks.

Photo: Oil price touches record of a barrel amid concerns about Iran

Analysts say oil prices are likely to climb higher in the weeks ahead as worries grow about how international pressure on Iran, OPEC's No. 2 oil producer, will affect its crude output. Rebel disruptions of oil production in Nigeria also pose a risk to world supplies.

Traders also worry that gasoline supplies may not meet summer demand after seven straight weeks of drops in domestic gasoline stocks, which are now at their lowest level since November.

"There are a lot of people that were disturbed with this week's energy numbers," said Alaron Trading Corp. analyst Phil Flynn, referring to the U.S. inventory figures. "There seems to be a lot of concern that the combination of the geopolitical issues, as well as refining issues, are enough reason not to abandon the long side of this market just yet."

U.S. refineries are operating below normal levels, as they continue to recover from last fall's hurricanes that battered the Gulf Coast, and as they perform seasonal maintenance. Furthermore, the transition from the gasoline additive MTBE, found to be a groundwater pollutant, to ethanol is creating additional fears about an already tight gasoline market.

Crude prices are more than 40 percent higher than a year ago, and have risen about 5 percent just this week a week that has seen not only crude and gasoline prices reach record heights, but also huge surges in other commodities, especially metals.

"I'm inclined to think it's not reached a peak yet," said Tobin Gorey, commodity strategist at the Commonwealth Bank of Australia in Sydney. "We're still faced with a tight supply-demand equation against the backdrop of strong economic growth, and there's still more money to come into the market," he said. He added that the Iranian threat was responsible for adding at least $15 per barrel to the oil price, reports AP.

O.Ch.