Air strikes send oil prices higher

Oil prices edged higher today after Turkish attacks on Kurdish rebels in northern Iraq and fresh concerns over US supplies.

The air strikes by Turkey and falling US imports after fog delayed deliveries pushed crude for February delivery to 94.80 US dollars a barrel in Asian trading.

Crude came within touching distance of 100 dollars a barrel in November - reaching a record 99.29 – on fears over US stock levels, a weak dollar and concerns over conflict in northern Iraq disrupting supplies. The region has the world’s third-biggest oil reserves.

The Turkish government first gave its approval for attacks on the PKK (Kurdistan Workers’ Party) rebels in October and began raids earlier this month.

The pressure on prices has also come from figures due from the US Energy Department on Thursday expected to show a sixth straight weekly decline in US oil inventories.

Analysts are expecting supplies to fall by 1.2 million barrels, blamed in part on fog that kept tankers outside the Houston Ship Channel last week.

In London, Brent crude for February delivery rose to a peak of 93.48 dollars a barrel.

Oil prices have risen by more than 40% this year, also driven higher by speculative buying – traders betting that the price would rise – and investors using oil as a hedge against the weakness of the dollar.

Next year costs should ease back as the world’s economy slows, dampening demand. The Opec oil cartel, which decided against raising production levels in December, will also consider lifting output in February after stronger-than-expected winter demand.