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Oil prices drop as Iran writes to USFars News/Hosein Fatemi/Reuters
Iranian President Mahmoud Ahmadinejad speaks at the Basij Militia in Tehran May 7, 2006. Ahmadinejad send a letter to U.S. President George W. Bush proposing new ways to resolve 'the current vulnerable situation in the world', an Iranian official said on Monday.
By Antoine Agasse
AFP
NEW YORK
Petroleumworld.com 05 09 06
World oil prices fell Monday on news that firebrand Iranian President Mahmoud Ahmadinejad has reached out to the United States in a bid to ease simmering tensions, analysts said.
News of a letter from Ahmadinejad to US President George W. Bush came as global powers were set to meet in New York in a bid to persuade Iran -- the world's fourth biggest crude producer -- to halt sensitive nuclear fuel work.
New York's main contract, light sweet crude for delivery in June, shed 42 cents to close at 69.77 dollars a barrel.
The price of London's Brent North Sea crude for June delivery slipped 74 cents to finish at 70.21 dollars a barrel.
Both the London and New York markets, however, recovered in late trade from much larger falls earlier in the day. Light sweet crude came off 68.20 dollars, while Brent at one point went as low as 69.06 dollars.
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 gasoline reserves.
But Fimat oil broker Mike Fitzpatrick said: "We still think that some of the 'hottest' speculative money is moving to the sidelines temporarily."
Iran said Monday that Ahmadinejad had written to Bush to propose ways to resolve a quarter-century of tensions between the arch-foes.
"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," government spokesman Gholam Hossein Elham said.
The message "goes beyond the nuclear question", he said.
The historic move brings an end to a 26-year-old break in official top-level contacts between Iran and the United States, which has called for UN sanctions to stop the hardline Islamic regime's disputed nuclear drive.
According to reports, Washington has even contemplated military strikes to stop Iranian nuclear development.
"The fact he's (Ahmadinejad) 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.
He added: "People appreciate that he's a fairly volatile character and that anything can still happen."
US Secretary of State Condoleezza Rice was to discuss Iran with her counterparts from Britain, China, France, Germany and Russia, plus European Union foreign policy chief Javier Solana, at a working dinner Monday.
UN Security Council members are bargaining over a Franco-British draft resolution that would legally require Iran to freeze all uranium enrichment and reprocessing activities.
Alaron Trading analyst Phil Flynn said the news from Iran and other geopolitical hotspots such as Venezuela "seems to be losing some of its shock value".
"We are now in sell-the-rally mode," he said, predicting oil prices would retreat further from the recent record highs.
But Fimat's Fitzpatrick said Iran has plenty of ability to shock the markets more.
"The Iranians are hardly showing signs of softening when members of parliament say they will push for withdrawal from the nuclear Non-Proliferation Treaty if the country's 'rights' under the accord are not respected," he said.
"They also recently suggested that halting uranium enrichment was not on their agenda, which it clearly is, so obviously this dispute is not going to go away easily."
Iranian leaders including the hardline Ahmadinejad have already signalled that Tehran could quit the NPT -- the cornerstone of the global effort against the spread of nuclear weapons.
AFP 05 08 06 2003 GMT
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