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Oil prices drop on easing Iran tension
By Damien Steffan
AFP
LONDON
Petroleumworld.com 05 09 06
World oil prices fell strongly Monday on news that Iranian President Mahmoud Ahmadinejad has written to US President George W. Bush in an attempt to resolve tensions with its arch-enemy the United States, analysts said.
News of the letter came ahead of a meeting in New York of the foreign ministers of the five permanent members of the UN Security Council plus Germany in a bid to map out a common strategy to force Iran -- the world's fourth biggest producer of crude -- to halt sensitive nuclear fuel work.
Oil market watchers fear that any action against Iran over its nuclear ambitions will result in cuts to its crude exports.
On Monday, the price of London's Brent North Sea crude for June delivery dived 1.32 dollars to 69.50 dollars per barrel in electronic deals, after hitting 69.06 dollars -- the lowest level since April 11.
New York's main contract, light sweet crude for delivery in June, shed 1.54 dollars to 68.65 dollars per barrel in pit trading.
World oil prices have dived in the past week, with Brent plunging from a historic record just below 75 dollars, also on news of a surprise rise in US motor fuel reserves.
Regarding Iran, Ahmadinejad has written to Bush to "propose new ways" to resolve a quarter-century of tensions between the arch-foes, Tehran announced Monday.
"The fact he's actually written to Bush might be seen by some people like a small positive step and that will cause some profit taking," said Investec analyst Bruce Evers.
"People appreciate that he's (Ahmadinejad) a fairly volatile character and that anything can still happen."
The historic move brings an end to a 26-year-old break in official top-level contacts with Washington and comes amid US calls for sanctions and even threats of force to stop the hardline Islamic regime's disputed nuclear drive.
"President Ahmadinejad has written a letter to George Bush, which is to be handed to the Swiss embassy," government spokesman Gholam Hossein Elham told reporters, adding that the message "goes beyond the nuclear question".
"In this letter, while analysing the world situation and finding the roots of the problems, he has proposed new ways for getting out of the existing vulnerable world situation," Elham said, adding that "the nuclear question is a part" of this situation.
Meanwhile, US Secretary of State Condoleezza Rice will host her counterparts from Britain, China, France, Germany and Russia as well as European Union foreign policy chief, Javier Solana, at a working dinner Monday that will focus on Tehran's rejection of repeated UN demands.
Security Council members are bargaining over a Franco-British draft resolution that would legally require Iran to freeze all uranium enrichment and reprocessing activities.
AFP 05 08 06 1658 GMT
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