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Oil prices rise despite US demand fears
NEW YORK
Petroleumworld.com, Jan 15, 2008Oil prices jumped Monday amid tensions in key crude producers Iran and Nigeria that offset concerns that US oil demand could decline amid economic uncertainty, traders said.
Oil prices also won support from the weak dollar, which encourages demand for dollar-priced commodities because they become cheaper for investors using stronger currencies.
New York's main oil futures contract, light sweet crude for delivery in February, closed up 1.51 dollars at 94.20 dollars per barrel.Brent North Sea crude for February delivery settled up 1.85 dollars at 92.92 dollars.
"Crude futures were higher on worries that Iran, the fourth largest exporter of crude, could cut oil exports to the US," said Sucden analyst Nimit Khamar.
The analyst said geopolitical tensions resurfaced after US President George W. Bush "accused Iran of backing militants (who) threatened security around the world."
Bush began a visit to close ally Saudi Arabia on Monday to rally support from the regional economic and political powerhouse for his campaign to isolate archfoe Iran.
Bush had warned on Sunday of what he called the threat to the world posed by the Islamic republic.
" The United States is strengthening our longstanding security commitments with our friends in the Gulf and rallying friends around the world to confront this danger before it is too late," he said on Sunday in the keynote speech of his Middle East tour.
" Iran's actions threaten the security of nations everywhere," Bush said.
Iran and the international community have been at loggerheads for several years over its nuclear drive, which Washington suspects is a cover for ambitions to build atomic weapons -- a charge Tehran strongly denies.
Tensions escalated shortly before Bush headed to the region after an encounter in the strategic Strait of Hormuz between Iranian speedboats and US warships.
Oil prices also remained at elevated levels above 90 dollars amid ongoing Nigerian rebel attacks on the country's oil industry in the crude rich Niger Delta region.
" Violence is Nigeria is on the increase and in the short-term, looks like getting worse," said MF Global analyst Robert Laughlin.
However, prices have eased back since striking record highs above 100 dollars at the start of the year.
Aside from geopolitics, traders are worried that economic difficulties in the United States -- the world's biggest consumer -- could dent global demand for crude.
" Recently oil prices have come under pressure as market participants are concerned that a global economic recession led by the US is likely to have an negative impact on demand growth," Khamar added.
Story from AFP
AFP 14 2038 GMT 01 08
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