Oil prices reached another record high today of over $64 a barrel as traders factored in the potential for Middle East supply disruptions that could add strain to a market struggling with refinery glitches.
US light sweet crude soared past yesterday's record high in early electronic trade today, hitting a new peak of $64.27 a barrel, 48 per cent higher than the start of the year.
It was trading up 11 cents at $64.05 a barrel by 5.10 am Irish time, while London Brent crude was up 10 cents at $62.80.
Dariusz Kowalczyk, CFC Securities Ltd
"The key issue now is the geopolitical risk," said Dariusz Kowalczyk, senior investment strategist at CFC Securities Ltd in Hong Kong. "Because spare capacity is so low, any threat to supply makes the market very nervous, either on the crude side or refined products side," he added.
After rallying since late-July on a series of US refinery outages that threaten to tighten fuel supplies, prices soared this week as Middle East security fears come back to the fore.
Britain yesterday cited "credible reports" of an attack in Saudi Arabia, which is battling a two-year campaign of violence by supporters of al-Qaeda leader Osama bin Laden, who in the past has urged attacks against well-protected Gulf oil infrastructure. The US warning also extended to seaborne vessels travelling in the southern Red Sea.
Iran, Opec's second biggest member, was also a focus of concern after Tehran resumed work at a uranium conversion plant yesterday, defying EU warnings that it could be referred to the UN Security Council for possible sanctions.