LONDON, June 27: Oil prices rose a dollar to a new record near $61 on Monday, driven by the resilience of world energy demand in the face of high fuel costs and worries about oil policy under Iran’s new hardline president. US crude for August delivery traded at a new high of $60.95 a barrel, up $1.11, before ending up by 61 at $60.45. US crude futures were above $60 for every delivery month to October 2006 with December 2005 scaling a peak $62.35 a barrel.
London Brent set a record $59.59 a barrel for again of $1.23 before ending up 87 cents at $59.23.
“The market is testing higher to see what price levels this demand can endure,” said Naohiro Niimura, vice-president at the derivative products division of Japan’s Mizuho Corporate Bank.
While high prices are eroding some strength from the world economy, the overall growth picture remains solid, central bankers meeting in Switzerland said at the weekend.
Economic resilience has encouraged speculators to test consumers’ ability to absorb higher costs, with only a significant pull-back in demand from an economic slowdown seen likely to tame prices.
“The only cure for high prices is in fact high prices,” said Nauman Barakat at brokers Refco in New York. “If you look at demand globally, high prices have had very little negative impact.”
Victory in Iran’s presidential election for ultra-conservative Mahmoud Ahmadinejad also helped support prices.
The Iran’s president-elect has vowed to flush out corruption from the country’s oil sector and favour domestic investors.
