Oil prices nudge new record

Oil prices approached a new record today after news of the death of King Fahd of Saudi Arabia unsettled markets.

A barrel of US light crude for September delivery reached 61.23 US dollars as traders fretted over the chances of a policy change in Saudi Arabia – the world’s biggest producer of oil.

But the prevailing view was that the impact of the news would be temporary as King Fahd had been hospitalised for a prolonged period of time and his brother, Crown Prince Abdullah, has been de facto leader during the past decade.

Fears of a hostile stand-off in Iran were also troubling traders as officials in the oil-rich country have set a deadline for EU negotiators to submit a list of incentives to stop it from restarting uranium reprocessing work.

Oil prices hit an intra-day high of 62.10 US dollars a barrel on July 7 and remain around 40% higher than a year ago.

Recent hurricanes off the US coast have supported prices and led to a number of power outages and shutdowns on rigs in the Gulf of Mexico, including the Thunder Horse platform owned by UK oil giant BP.

Concerns over summer supply shortages have been reawakened over the past few weeks as gasoline stocks in the US have fallen to the lowest levels since late last year.

Iran’s latest threat to restart its nuclear enrichment program was keeping markets jittery because it could disrupt oil supplies from OPEC’s second-largest exporter.

Iran threatened on Sunday to restart uranium reprocessing work if negotiators from the UK, France and Germany do not immediately offer a promised package of incentives to entice Tehran to freeze its nuclear program.

Iran’s parliamentary speaker set a deadline of today for European negotiators to come up with a list of incentives. Gholam Ali Hadad Adel warned that the deadline was the “final opportunity” for Europeans to submit such a list.

Tehran halted uranium enrichment in November under international pressure led by the US, which says the country’s nuclear program is aimed at making weapons. Iran maintains its programme is peaceful.