Oil prices hit record highs

Oil prices hit record levels in London today amid concerns that Iran’s nuclear stand-off and violence in Nigeria could hurt supplies.

A barrel of Brent crude in London climbed to an all-time high of 69.70 US dollars while in New York light, sweet crude rose to 69.45 US dollars a barrel.

The price in New York was just below its record level of 70.85 US dollars a barrel reached after Hurricane Katrina battered oil rigs in the Gulf of Mexico and refineries in the United States in August last year.

The record price of oil in London came as other commodities continued to hit new highs, with copper, gold and platinum all on the up.

The current round of oil price rises came amid mounting tensions between the West and Iran over the Middle Eastern nation’s nuclear programme which has led to speculation that the US may be planning an attack.

The UN Security Council has demanded that Iran suspend its uranium enrichment programme, while the European Union is considering what measures to take.

But Iran has so far refused to back down, saying the project is for research and not for development of nuclear weapons.

Violence in Nigeria that has forced the shutdown of more than half a million barrels a day of supply has added to concerns, while more than 300,000 barrels per day of Gulf of Mexico production remains off the market as a result of last summer’s hurricanes.

Barclays Capital oil analyst Kevin Norrish said the price of light, sweet crude could touch70 US dollars a barrel again soon.

Political tensions in the Middle East have intensified following a magazine article that said US President George W Bush and his advisers were planning for a possible military attack against Iran.

This drew a strong reaction from Iranian President Mahmoud Ahmadinejad, who accused the administration of creating a “psychological war”, Barclays noted.

The war of words was taking place at a time when the market was also adjusting to loss of high-quality Nigerian oil and had one eye on the summer driving season in the United States, it added.

The rising price of crude today put pressure on the shares of major fuel consumers such as British Airways, chemicals firm Johnson Matthey, and engineer Smiths Group.

But oil producers BP and Royal Dutch Shell shares went in the other direction, rising about 1% each.

Meanwhile, the price of copper has risen from 5,000 US dollars a tonne to 6,000 US dollars in less than a month, while gold’s rise from 500 US dollars an ounce to 600 US dollars an ounce took just a little longer.

The soaring prices have sent mining stocks soaring with Xstrata, Rio Tinto and BHP Billiton building on recent gains with a fresh rise of 2% today.

Claire Collingwood, trader at CMC Markets in London, said: “Once again rising crude prices dominated the market, pushing the oil and gas sector higher for the third consecutive day.

“The recent surge in oil prices comes off the back of continuing nuclear disputes between Iran and the West as well as constant supply fears as militants remain a threat in Nigeria.

“Mining stocks also crowded the leader board as the sector reached an all-tme high, following a strong performance in Asia overnight as demand for raw materials continues to keep prices high.”