Iran tensions spark record oil prices

OIL prices hit new historic highs yesterday as the price of New York’s light sweet crude hit a peak of $70.88 per barrel (pb).

Markets remain hugely concerned over the threat of the US to launch an attack on Iran, which refuses to give up its drive towards creating a nuclear capability.

Since the first indication by US President George W Bush that a strike on Iran could not be ruled out, the markets have continued to fret about the impact of such a move on global oil stocks, already on a knife edge since Hurricane

Katrina struck New Orleans last year, battering oil facilities along the Gulf Coast.

As a result US oil prices hit a high of $70.85pb on August 30, 2005.

Yesterday's price of $70.88pb beat that record by a few cents.

Earlier Brent North Sea crude oil hit a new record of $72.20pb and analysts warned worse was to come.

Market concerns that the US could attack Iran, the world's fourth biggest producer of crude have not been assuaged by the tough stance of the US.

However the current prices are below the last real historic highs hit back in 1979, when adjusted for inflation oil hit $80pb in today's prices.

Since April 10, the price of Brent crude has been making new highs on the back of fears that the US may attack Iran down the line.

Other factors are also at play. Nigeria has been under rebel attack and close to 500,000 barrels per day of Nigerian crude is not making it to market since rebels attacked supply lines.

In Israel a fatal bomb attack in Tel Aviv added to market nervousness.

The concerns over Iran and disruption to nearly a quarter of Nigeria's high-quality crude output off-line since mid-February, will become more critical as the US driving season begins next month, analysts said.

They estimate petrol stocks in the world's top oil user fell by 2.2 million barrels last week.

Organisation of the Petroleum Exporting Countries (OPEC) ministers have said there is nothing the group can do to bring down prices.