Oil price hits new peak

The cost of oil surged to a new record near US$144 a barrel today as oil company bosses gathered in Madrid to discuss rocketing prices.

Oil soared past US$143 a barrel on tensions in Iran as investors also sought refuge from a weaker dollar.

Light, sweet crude for August delivery hit US$143.67 a barrel in electronic trading on the New York Mercantile Exchange, before slipping back slightly.

The new all-time high comes as the heads of oil majors such as BP and Royal Dutch Shell and a senior European Union official meet to address the World Petroleum Congress in Madrid.

The conference’s opening session struck a sombre tone as oil’s record run continued, with speakers agreeing that prices were unlikely to return to 2005 levels.

BP chief executive Tony Hayward warned against hopes that the present high prices are a bubble that will burst as they did in the 1970s, saying that supply and demand had since changed.

Concerns over global supplies and tension between Iran and Israel have pushed prices higher in recent days.

Oil traders reacted today to reported warnings from the commander of Iran’s Revolutionary Guards that Tehran would attack Israel with missiles if his country was attacked.

Weekend reports also suggested that if Iran were provoked, it would move to control a key oil passageway in the Gulf. Iran is the world’s fourth-largest oil exporter.

An emergency summit in Jeddah, Saudi Arabia, earlier this month, failed to ease the current oil price surge, despite the Kingdom pledging to add another 200,000 barrels per day next month to a 300,000 barrel per day production increase already announced in May.

But markets were left disappointed amid concerns that more is needed for supply to keep up with demand. Last week the head of the Opec oil cartel said prices could reach as high as US$170 a barrel this summer.