Fears over Iran see oil top $73 a barrel

OIL hit a new high above $73 (€58.94) per barrel (pb) yesterday on fears that Iran’s intensifying dispute with the West may hit oil supplies and after a sharp fall in US petrol stocks.

London’s Brent crude peaked yesterday at a fresh record of $73.34 (€59.22).

Rising demand, scarcity of supplies and the fear of an attack on Iran by the US is keeping markets nervous.

Some analysts expect prices hitting $80pb (€64.59) in the coming months even without an attack on Iran.

At $80pb, oil prices would equal the high reached 1979 after that figure is adjusted for inflation.

Since 2003 the pressure on oil prices has had a significant impact on petrol prices. In August 2003 the price per litre at the pumps in Ireland was 88.7 cents, against the price of 116-117c per litre being charged in Dublin yesterday.

Last month the average price per litre was 107.5c nationwide.

In the US, dealers warned that prices could head higher after crude futures hit peaks of $71.60 (€57.81) in New York and $72.64 (€58.65) in London, due to the geopolitical tensions being generated by Iran’s nuclear ambitions.

In trading yesterday, New York’s main contract, light sweet crude for delivery in May, dropped 35c to $71pb (€57.33), after reaching $71.35 on Tuesday. In London, Brent North Sea crude for June delivery slid 15c to $72.36pb (€58.43) in electronic dealing.

Analysts said prices could reach $75-$80 going into the US driving season. They said panic could follow if there is any sign of a hurricane season.

The Atlantic hurricane season runs from June to November.

In August 2005, Hurricane Katrina battered oil production platforms in the US Gulf of Mexico, sending crude prices to their previous records.

Expectations of a further decline in US petrol inventories are fuelling market jitters, especially with supplies tight ahead of the US driving season, beginning in May, when many take to their cars for holidays

Security analysts say that in a conflict, Iran could block the Strait of Hormuz, a strategic choke-point for oil exports.

Given the range of uncertainties, analysts are forecasting petrol at $4pb (€3.23) going forward, which would be equal to 120c per litre in Ireland.

Green Party energy spokesman Eamon Ryan warned the globe was looking at oil hitting $100pb (€80.75) if the current unrest continues.

The only answer to the rising price spiral was to consume less, he said.

“Oil prices may spike above $100 a barrel within the year, but calls for a cut in taxes instead of moving to reduce our oil dependency were missing the point.

“Prices may fall in the short term, before soaring when the long-term problems with peak oil really start to kick in.”