Crude Oil Rises to Record on Speculation Israel May Attack Iran

Crude Oil Rises to Record on Speculation Israel May Attack Iran
By Alexander Kwiatkowski

July 11 (Bloomberg) — Crude oil rose more than $5 to a record on concerns that Israel may be preparing to attack Iran, while a strike in Brazil and renewed militant activity in Nigeria threaten to cut supplies.

Oil rallied to a record high of $146.90 a barrel in New York after the Jerusalem Post said Israeli war planes practiced over Iraq, adding to speculation the country is preparing to attack Iran. A Brazilian union said it plans a five-day strike on platforms that pump 80 percent of the country’s crude and Nigerian militants pledged to renew attacks on oil facilities.

“We are now in uncharted territory here with the Iranian situation,” Tom James, head of commodities trading at Liquid Capital Markets Ltd., said in a phone interview “People are just too scared to sell.”

Crude oil for August delivery rose as much as $5.25, or 3.7 percent, to an all-time high of $146.90 a barrel on the New York Mercantile Exchange and was trading at $146.59 at 1:46 p.m. in London.

Israeli war planes are conducting maneuvers in Iraqi airspace and using U.S. airbases in the country, possibly practicing for a strike against Iran, the newspaper reported, citing comments by Iraqi officials in local media. Israeli government spokesman Mark Regev denied the report.

Iran, OPEC’s second biggest producer, this week tested missiles capable of reaching Israel.

Brent crude oil for August settlement rose as much as $5.22 a barrel, or 3.7 percent, to $147.25 a barrel and was trading at $146.94 at 1:46 p.m. local time on London’s ICE Futures Europe exchange.

Falling Stockpiles

Yesterday, the contract gained $5.45, or 4 percent, to $142.03 a barrel. Prices climbed to a record $146.69 on July 3.

Oil may rise next week because of threats to supply from Iran and Nigeria and falling stockpiles in the U.S., the biggest energy-consuming country, according to a Bloomberg News survey.

Gasoline prices in the U.S. rose to a record. Futures for August delivery rose as much as 10.46 cents, or 3 percent, to $3.6155 a gallon on Nymex.

The average price of a gallon of gasoline at the pump in the U.S was $4.11 on July 8, according to AAA, 38 percent higher than a year earlier.

About 4,500 employees of state-controlled Petroleo Brasileiro SA will take part in a protest on platforms in the offshore Campos basin to get full pay for the day they return to the mainland after a 14-day shift at sea, a union official said yesterday.

Iran’s Exports

The standoff has led to concern that Iran may come under attack from the U.S. or Israel, disrupting exports from OPEC’s second-biggest producer.

“You could survive with one of these factors, but if they come all at the same time it will drive prices up,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “As soon as violent attacks increase in Nigeria it is a threat to production.’ ‘

The Movement for the Emancipation of the Niger Delta said attacks will resume on oil facilities. The Nigerian militant group said it will call off its unilateral cease-fire beginning midnight on July 12.

MEND’s attacks on pipelines and other installations have cut more than 20 percent of Nigeria’s oil exports since 2006. MEND says it is fighting for a greater share of oil wealth for the impoverished inhabitants of the Niger Delta.

The group declared a cease-fire after a June 19 attack on Royal Dutch Shell Plc’s Bonga deep-water oilfield, located 120 kilometers (75 miles) offshore that cut 190,000 barrels a day of oil output.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@ bloomberg. netNesa Subrahmaniyan in Singapore at nesas@bloomberg. net.

Last Updated: July 11, 2008 08:50 EDT

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: