Oil recovers after $3 drop

OIL prices recovered rapidly yesterday having fallen by $3 on Thursday following the massive terror alert at Britain’s airports.

Brent crude was back up at $75.99, still well short of Tuesday’s peak of $78.65, sparked by the loss of 400,000 barrels of oil per day (bpd) from BP’s field in Alaska.

Experts warned yesterday the global oil situation remained on a knife edge as the International Energy Agency said the world can cope for now with the loss of about one million bpd of oil from Alaska and Nigeria, but the pressure is on exporter group OPEC to fill that gap.

It has bumped up the estimate of demand for oil from the OPEC countries by 600,000 bpd in the third quarter and 200,000 bpd in the fourth in its monthly Oil Market Report.

However, while oil consumption has stayed flat at 84.8 million bpd, Bank of Ireland Global Markets’ energy expert Paul Harris said Thursday’s oil price dip was just a “knee-jerk reaction” as yesterday’s part recovery in the price of oil demonstrated.

He warned the next psychological barrier for oil is $80 per barrel (pb) which he believes is looming.

“Once that barrier is passed, the probability of oil hitting $100pb isn’t beyond the realms of possibility,” he said.

Taking the longer term view out to 2010/11, Mr Harris said he does not foresee oil price going below $60pb ever again.

Meanwhile, Labour Party spokesman on Energy, Tommy Broughan yesterday called for urgent Government action to deal with the continuing oil price rises.

He has demanded that Natural Resources Minister Noel Dempsey and the Government plan and roll out a comprehensive policy on soaring fuel prices from September 1.

Tax on petrol makes up significantly over half of the total price that motorists are charged at the pumps, he said. If the price of petrol is at €1.25 a litre, the total tax take of that “is an astonishingly high 66 cents”, he said.