Oil prices steam ahead on Iraq, gasoline worries

Agence France Presse

London, May 17 :

Oil prices shot higher again in early trading here on Monday after the head of the Iraqi Governing Council was killed in a bomb blast and the red-hot gasoline market showed little sign of cooling. The price of benchmark Brent North Sea crude oil for delivery in July rose by 39 cents to $38.25 in London. New York’s reference light sweet crude for June delivery gained 34 cents to $41.72 in pre-opening electronic dealing, a new all-time high. On Friday the contract broke the previous record peak of $41.15 set in October 1990, in the run-up to the Gulf War. Adjusted for inflation, current prices are still far below the 1990 high, however. The market was “very strong,” said GNI-Man Financial trader Lee Elliott. “It is still up on the fact that the gasoline in the States is very high.”

Worries about instability in the Middle East were stoked by the death of the current head of the US-appointed Iraqi Governing Council, Ezzedine Salim, in a suspected suicide car bomb blast. “If something happens in the Middle East or elsewhere, prices will move much higher,” said Elliot. “But for the moment, gasoline is the key factor.” Even the prospect of an output increase by OPEC producers did little to calm market jitters. The Organisation of Petroleum Exporting Countries might hold a formal meeting in Amsterdam this week to approve a hike in production meant to appease record high prices, the Qatari energy minister said on Saturday. Abdullah Bin Hamad Al-Attiyah told reporters that “there is a big chance” that an informal meeting of OPEC ministers on the sidelines of an energy summit due on May 22-24 in Amsterdam could become a formal meeting. “We will meet first to consult, if we reach an agreement, we change it to an extraordinary meeting,” he said on the sidelines of a World Economic Forum meeting in Shuneh in Jordan.

WEF’s concerns

Southern Shuneh: Fluctuating oil prices should not cause alarm, although they are a key source of global instability, participants at the World Economic Forum (WEF) felt. Oil prices have soared in recent weeks, with the degenerating security situation in Iraq and an attack on a petrochemical facility in Saudi Arabia. Analysts have cited lost production in Iraq, lower production in Nigeria and Venezuela and exploding demand from China as factors worsening the situation. — AP